Future Prospects for LNG in the Arab Countries and Implications on the Global LNG Market
The 3rd International LNG Summit
OAPECOrganization
of Arab Petroleum
Exporting Countries
3rd
Annual
Gas Industries Expert
OAPEC
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 20182
Agenda
Setting The Scene: Latest Developments in Global LNG Market
LNG in the Arab Countries: Major Supplier or Fast Growing Market?
Prospects for LNG Supply in the Arab Countries: Challenges and Opportunities
Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 20183
Organization of Arab Petroleum Exporting Countries
~49% of the World’s Total
Reserves
Transport, Shipbuilding,
Investment & Petroleum
Services
+Training Center
27% of the World’s Total
Reserves
~15% of the World’s Total
Gas Production
31% of the World’s Total
Oil/NGL Production
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 2018
Setting The Scene: Latest Developments in Global LNG Market
Development of Global LNG Demand, MT*
4
Source: OAPEC, GIIGNL, EVA
LNG imports in 2017 versus 2016, MT
25 MT
18 MT
GLOBAL DEMAND IN 2017
Demand went up +25 MT, led by
the soaring demand in China
ANNUAL GROWTH RATE, YOY
The highest YOY growth since
Fukushima disaster
*MT : million tons
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 20185
Setting The Scene: Latest Developments in Global LNG Market
0
50
100
150
200
250
300
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
mt DEVELOPMENT OF GLOBAL LNG EXPORTS, MT
Qatar Algeria OmanUAE Egypt YemenAustralia USA IndonesiaMalaysia T&T NigeriaOthers % of Arab Countries
Arab countries LNG exports nearly stable at 105 mt, while market share declined from 48% in 2011 to 36% in 2017
Australia and the US. lead the LNG supply growth, gaining higher market share ( together ~24% in 2017)
Source: OAPEC, GIIGNL, EVA
Australia
MT
9%
19%
73
115 106 105
2007 2011 2016 2017
MT
Arab Countries
42%
36%48%
US
1%
MT
4.6%
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 20186
Setting The Scene: Latest Developments in Global LNG Market
85%The total increase in global liquefaction capacity
in 2007-2017 (~170 MTPA)
80%The average utilization rate of supply capacity
in 2017
▪Arab Countries: led by Qatar, represent
38% of the global LNG capacity (137.4
MTPA)
▪Australia: supply capacity hiked from 37
MTPA in 2015 to 71 MTPA in 2017.
▪US.: 4 trains of Sabine Pass project
become online with total capacity 18 MTPA
Source: OAPEC, GIIGNL, EVA, BNEF
Liquefaction Capacity per Country, 2017
*MTPA: million tons per annum
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 20187
LNG in the Arab Countries: Major Supplier or Fast Growing Market?
0
2
4
6
8
10
12
14
2011 2013 2015 2016 2017
MT
Libya
Yemen
Egypt
Algeria11%
Egypt1%
Oman8%
UAE5%
Qatar75%
Distribution of LNG Exports Per Country, 2017
Total LNG export104.5 MT
Supply
0%
20%
40%
60%
80%
100%
120%
Qatar UAE Oman Algeria Egypt Yemen
Utlilized% Non-utilized%
▪LNG plants in Qatar,
UAE and Oman are
near full operation.
▪75% is the average
utilization rate of
LNG plants in 2017.
Average utilization % of LNG plants
Algeria
EgyptLibya
UAE
Qatar
LNG plants (Partial Operation<50%)
LNG plants (full operation)
LNG plants (Stopped)
LNG Plants in the Arab Countries
19641971 2005
2009
2000
19771996
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 20188
LNG in the Arab Countries: Major Supplier or Fast Growing Market
20112016
56 66
97 125
Asia
20112016
292
8
MENA
20112016
8
2
11
15
Americas
20112016
48
29
17
10
Europe
Development of Arab LNG exports to regional and global markets, MTMarket Dependency%
Americas9 91 1%
MENA52 48 9%
Europe
74 26 27%
Asia35 65 63%
Share %
Data Source: OAPEC, GIIGNL
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 20189
LNG in the Arab Countries: Major Supplier or Fast Growing Market
0
3
6
9
12
15
18
Kuwait
Dubai
Egypt
Jordan
A/Dhabi
Mt
Development of LNG Imports in the Arab Region, MT
Kuwait Dubai Egypt Jordan A/Dhabi
Dubai17%
A/Dhabi5%
Kuwait25%
Jordan19%
Egypt34%
2017
7 FSRUs* are moored in 5 markets, with total
regasification capacity of 34 MTPA7
Total LNG deliveries to Arab LNG markets in
2017 (50% utilization of regasification capacity)17MT
12
4 3 34
10
17.4 17
15
2019 19
2223
21
16.1 16
2009 2010 2011 2012 2013 2014 2015 2016 2017
MT
MENA
Americas
The MENA LNG imports surpassed Americas imports in 2016!
Demand 2016
2015 2015
5.2 bcm/y
FSRU
2015
7.8 bcm/y
FSRU
2009
8.2 bcm/y
FSRU
4.9 bcm/y
FSRU
20102015
7.1 bcm/y
FSRU
Egypt A/Dhabi
Dubai
5.2 bcm/y
FSRU
7.8 bcm/y
FSRU
Jordan
*FSRU : floating storage and regasification terminal
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201810
0
16 17
26 2732
42
50
5763
72
0
10
20
30
40
50
60
70
80
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
mtp
a
Medium and long term SPAs* roll-off volume, MTPA
Cumulative Contracting Volume Incremental Contracting Volume
Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities
“32 mtpa” of LNG SPAs signed between Arab LNG exporters
and their customers will free up according to expiry dates2023
“72 mtpa” of LNG SPAs signed between Arab LNG exporters
and their customers will free up according to expiry dates. 2028
LNG buyers appetite to sign smaller volume contracts
1.8
0.90.8 0.8 0.8
2013 2014 2015 2016 2017
Average Contract volume, MTPA
2018 Qatar Uniper 1.5
2019
UAE JERA 4.3
Algeria Engie 2.5
Algeria Engie 3.7
Algeria Engie 1.3
Algeria Botas 3.02
2020 OmanMitsubishi
0.8
2021
Algeria DEPA 0.35
Algeria Iberdrola 1.15
Qatar JERA 4
Qatar JERA, ..etc 2
Qatar JERA 1
QatarShizuoka
Gas0.2
2022 Algeria Cepsa Gas 0.77
2023
Qatar Centrica 3
Qatar RWE 1.1
Qatar Petronas 1.14
2024
Oman Kogas 4.06
Oman Osaka Gas 0.66
QatarKogas 4.92
GNF 0.75
2025
Oman UFG 1.65
Egypt Engie 3.6
Egypt BP 1
Qatar Endesa 0.74
Qatar GNF 0.75
2026
oman Ituchu 0.77
Oman Osaka Gas 0.8
Egypt Shell 3.6
Qatar Kogas 2.1
2027
Qatar EDF 3.4
Qatar Eni 2.05
Qatar Kensai 0.5
2028
Yemen Kogas 2
Qatar Petronet 1
Qatar petronet 5
Qatar JERA 1
Expiration Seller BuyerVolume,
MTPAExpiration Seller Buyer
Volume, MTPA
13 13
97.5 7
2013 2014 2015 2016 2017
Average Contract Length, years
LNG buyers appetite to sign shorter length contracts
Qatar, 36.2
Algeria, 12.8
Oman, 8.7
Yemen, 2.0
Egypt, 8.2
UAE, 4.3
2028
*SPA : Sales and purchase agreement
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 2018
0
50
100
150
200
250
300
350
400
450
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
MT
Emerging LNG Supply-Demand Gap
Asia Europe Middle East N.America S.America Supply
11
Australia
Australia
US. US.
Russia
Russia
MalaysiaIndonesia
Cameron
0
5
10
15
20
25
30
35
40
45
2018 2019 2020 2023-2025
MTPACAPACITY ADDITIO NS IN 2018 - 2024
Australia US.
Russia Malaysia
Indonesia Cameron
Sources : BNEF, EVA, OAPEC, Potten & Partners, Shell
THE GLOBAL LNG CAPACITY BY 2020
-As of Jan-2018, there is 83 MTPA of LNG
capacity under construction.
-A next wave of US. And Australia projects will
come online in 2018-2019
Oversupplied Supply-tight
THE QATARI/TOTAL ARAB LNG CAPACITY BY 2024
-Qatar will boost its LNG capacity to 100 MTPA by 2024
by adding 2/3 Mega trains and debottlenecking of its
existing facilities.
-The project will have the lowest cost of any planned LNG supply additions globally.
Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities
2024
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201812
35,000
24,500
5,000
1,000
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Current IMO Global Limit
Average Marine H.F.O
2020 IMO Global Limit
ECA Limit
Road Diesel Limit
In force since Jan 2015
Sufur Content in Marine Fuels and limits (ppm)
Data Source: IMO
Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities
3.5%
2.45%
0.5%
0.1%
Global Marine Fuel Demand in 2016
Demand
Options
Transition Volume
LNG
Either using H.S.F.O with scrubbers or using low sulfur fuels including distillates
Global marine fuel demand is mainly met by Fuel Oil (86%) followed by diesel (14%)
LNG is on top of the agenda as an alternative marine fuel to meet IMO new regulations
New transition is significant since it represents
75% of global marine fuel demand compared to ECA.
Very limited fleet representing 0.2% of the world total fleet.
LNG bunkering availability is still at early stages
Difficulty to access financing for ship building
Barriers to use LNG as a marine fuel
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 2018
0.5
22.5
30
2017 2025 2030
Data Source: Shell, QP, TMR
In terms of demand, MT
13
Prospects for LNG Supply in the Arab Countries: Challenges & Opportunities
QP and Shell Formed LNG Marine bunkering venture in mid-2017 to develop bunkering infrastructure at strategic shipping locations across the globe.
LNG-Powered Ships, as of October 2017
Ships in operation
Ships on order
116
112
228 Total LNG-Powered fleet
Middle East (UAE, Egypt,..)
East Asia (Japan, China, Singapore,..)
North Sea (ECA)
Baltic Sea (ECA)
Coast of North America (ECA)
*ECA: Emissions Control Area(North sea, Baltic sea, English Channel
248
8,187
2016 2023
In terms of investment, M$
Data Source: BW
Annual rate 65%
Annual rate 61%
Outlook of LNG Bunkering….?
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201814
31
20
18
20
21
20
19
20
23
FSRU with a total regasification capacity of 5.2
bcma
FSRU with a total regasification capacity of
7 bcma
FSU with a totalregasification capacity of 4.1bcma and upgradable to 8.2bcma in the future.
Fixed LNG terminal witha total regasificationcapacity of 31 bcma.
KuwaitBahrain
UAE (Sharjah) Morocco
Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities
“3” FSRUs + “1” OnshoreThere are 3 FSRUs planned to beconstructed in Bahrain, UAE (Sharjah) andMorocco and 1 onshore terminal in Kuwait
47 bcma (35 MTPA)The total regasification capacity of theongoing/planned projects.
Long term SPAs
KPC signed a 15-year SPA with shell todeliver 2-3 mtpa starting from 2020.
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201815 15
Tank Area Each Tank has a Volume Capacity
of 225,000 m3
(Based on 12 Days autonomy for maximum send out)
Regasification / Process Area
The Plant has a total regasification Capacity of
3,000 BBTU/day
Jetty Area Two jetty heads can accommodate • LNG carriers for import from
122,000 to 266,000 m³.• LNG carriers for export from
18,000 to 266,000 m³.
Send out lines:2 X 52” underground NG
send-out Pipelines to KOC.
Kuwait Onshore Terminal Project
In operation by 2021
Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201816
Egyp
tK
uw
ait
Du
bai
Jord
an
A/Dhabi
0
3
6
9
12
15
18
21
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
MTP
A
LNG Demand Outlook in the MENA Region
Egypt Kuwait Dubai Jordan A/Dhabi Bahrain Others
Outlook for LNG DemandIt is expected to be around 16-18 MTPA over thenext decade according to current plans andongoing projects
LNG MarketsThe number of LNG markets will reach 9 includingBahrain , UAE (Sharjah) and Morocco as newcomers.
New Comers Egypt
Demand growth coming from new comers will compensate the demand decline in Egypt
Markets
Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities
Source: OAPEC, Poten & Partners, EVA, BNEF, Shell outlook
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201817
2.6
7.5
5.8
3.4
1.2
2015 2016 2017 2018 2019
Egypt’s Zohr Discovery… Lowering Egypt dependence on LNG imports.. What’s Next? 1
Revival of LNG exports from stopped LNG plants on the Mediterranean coast 2
Potential gas hub for all East Mediterranean gas discoveries 3
LNG imports in Egypt, MT
Prospects for LNG Demand in the Arab Countries: Challenges and Opportunities
Idku Damietta
LNG plant
Proposed pipeline
East MediterraneanIt is a rich-gas province with a potential gasresources of 10 tcm*, discovered to date ~ 2tcm
Access to the marketMost of discoveries are located in ultra-deepwater > 1,700 meter. Developers will incur highcosts to bring gas into market.
Egypt infrastructure
Egypt has two idle LNG plants (3 trains) of 12.2MTPA and can accommodate more trains.
*Tcm: trillion cubic meter
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201818
Final Remarks
▪ Today’s LNG market is ~ over-supplied and over-contracted and the appetite of buyers is going towards contracts of smaller volumes and shorter lengths.
▪ Finding new opportunities for LNG is much needed to further grow as a clean energy source. LNG bunkering is a promising opportunity to be considered.
▪ By 2024 , global LNG market will become supply-tight. By then, Qatar will boost its LNG capacity to 100 MTPA to meet future market needs.
▪ Since decades, Arab LNG exporters (Qatar, Algeria, Oman,…) are reliable and secure LNG suppliers to the global markets. Arab LNG exports represented ~ 37% of the global LNG trade in 2017.
▪ The flexibility and reliability afforded by FSRUs, opened access to “new markets” in the Arab region (like Kuwait), to meet the growing demand on electricity, making the region the third largest LNG market worldwide.
▪ There is a potential to have a gas/LNG hub in the East Med region exploiting mothballed LNG infrastructure in Egypt
The 3rd International LNG SummitHamburg, Germany. 25-26 April, 201819
Q?
Eng.Wael A.Moati
Gas Industries Expert,
OAPEC
Cell: +96555157915
For inquiries:
