World National Oil Companies Congress – 24 June 2010 – London
Dynamics of the LNG markets
Philip OLIVIERPresident of GDF SUEZ LNG
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Global LNG production - pre-crisisLondon - 24 June 2010
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Global LNG production - post-crisis
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First ever significant decrease in world natural gas consumption in 2009
Pre recession forecast • Pre recession
forecast : 2.6% p/a
• 3‐4 year delay to recover to 2008 global gas demand level
• Pipeline gas to recover in 2014/2015
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Pipeline gas and LNG consumption – crisis and recovery : 2010-2015 Focus
• 2009 assumed gas overcapacity : ~ 100 BCM
• +1,6% yoy gas demand growth expected in 2010‐2015
• As LNG has to flow and find a home, world gas recovery may first absorb LNG, and then pipeline gas
100 BCM
(BCM)
CERA – GDF SUEZ analysis
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Natural gas worldwide supply overcapacityin 2009
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2009 gas consumption decrease
Additional LNG capacity
2009/2008 supply overcapacity
50
10
12
12
Europe
N & S America
Asia
72
30 102
Hypothesis : 2008 supply/demand balanced year, no storage effect taken into account
(BCM) • 2009 assumed gas overcapacity of 100 BCM originates mostly from European consumption decrease and additional LNG capacity coming on‐stream.
Source: GDF SUEZ
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(BCM)Asian natural gas demand decrease
Additional LNG contracted to Asia
Natural gas oversupply in Asia
LNG redirected to NA, SA and
ME
LNG redirected to
Europe
Source: GDF SUEZ
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UK10
In 2009 :
• An additional 25 BCM is forced from the Pacific Basin to the Atlantic Basin
8
10 NA
25 14
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2009 Natural gas oversupply - Asia
2009 Natural gas oversupply – Europe
2009 European natural gas demand decrease
Additional redirected LNG
to Europe(BCM) In 2009 :
Significant impact of the crisis on the European natural gas market, and especially on the European LNG market
Oversupply absorbed by pipeline reduction, domestic production decrease and storage
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50
11 63
Natural gas oversupplyto Europe
Source: GDF SUEZ
Additional contracted LNG
to Europe
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2009 Natural gas oversupply – North America
2009 North American natural
gas demand decrease
Additional LNG to North America(BCM) In 2009 :
Minor impact of the crisis on the North American natural gas market (20 BCM oversupply vs 770 BCM of natural gas market, i.e. 2.6%).
Oversupply assumed mostly absorbed by storage
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Natural gas oversupply
to North America
10
10 20
Source: GDF SUEZ
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NBP and Henry Hub comparison
In a LNG surplus context:
• Market anticipates short term NBP/HH convergence, then slow divergence
• HH becoming price floor for NBP
Forward curves 2010‐2015
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European case example: UK LNG needs
• Reduction of UK domestic gas production: 31 BCM from 2005 to 2009
• UK LNG imports in 2009: 11 BCM(incl. 6 BCM from Qatar)
• UK LNG needs to accelerate as production decline expected to continue
Source : GDF SUEZ
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Global LNG production and demand
• Strong sensitivity to pace of recovery creates huge uncertainties on total gas demand
• Current surplus assumed absorbed by pipelines
• New LNG capacities might be required in 2014 but some of the potential liquefaction projects will be further postponed
• In the short term, a long market, but in the medium/long term, a potential tighter market and a need for new capacities
100 BCM gas bubble
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Changing supply/demand balance in Asia
• Asian demand growth: +5%/year in 2010‐2020
• Many buyers still waiting before contracting new LT supply
• In the short‐term: Asia will not be THE destination for flexible LNG
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Flexible & uncommitted volumes availablefor the Atlantic Basin
• About 35 MTPA available for the Atlantic Basin(incl. Middle East) between 2013and 2015
REDISCOVERING ENERGY
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