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The Changing LNG Paradigm 2015-20 Gastech 2014 March 25 Peter Thompson © Gas Strategies 20141.

Date post: 01-Apr-2015
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The Changing LNG Paradigm 2015-20 Gastech 2014 March 25 Peter Thompson © Gas Strategies 2014 1
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  • Slide 1

The Changing LNG Paradigm 2015-20 Gastech 2014 March 25 Peter Thompson Gas Strategies 20141 Slide 2 3 Events, 3 Continents, 3 Months, One Question: How is North American LNG reshaping the industry? Houston, 12/12/13 Gas Strategies 20142 London, 26/11/13 Singapore, 6/2/14 Slide 3 Our perspective and our clients Gas Strategies 20143 Slide 4 US LNG and the potential to change global LNG Gas Strategies 20144 Source: IEA Source: Gas Strategies Themes 1.The disaggregated Value Chain 2.Acceleration and Disruption 3.Approach to financing 4.The effect on Global Trade Source: Gas Strategies Slide 5 A disaggregated value chain Gas Strategies 20145 E&P led investors (IOCs etc) Integrated Simultaneous Project Development Gas cost driven by production economics Plant a means of monetising gas Gas producers already producing Fragmented infrastructure much pre-existing Gas cost local market-price driven Liquefaction plant an infrastructure play Offtaker upstream midstream downstream Slide 6 A disaggregated value chain Gas Strategies 20146 Typical LNG E&P led investors (IOCs etc) Integrated Simultaneous Project Development Gas cost driven by production economics Plant a means of monetising gas Utility and other market-led buyers Aggregators Price linked to end-market Some destination restriction DES or FOB US LNG Gas producers already producing Fragmented infrastructure much pre-existing Gas cost local market-price driven Liquefaction plant an infrastructure play Aggregators Smaller volumes per contract? New entrants seeking volume FOB, part of the flexible pool? upstream midstream downstream Slide 7 Disruption and Acceleration Acceleration Of new technology and contractors Of entry for new buyers and traders but do they have the capability and organisation? Of access to volume for niche buyers and additive value chains? Gas Strategies 20147 Disruption To market and marketing for pre-FID projects To price (LT contracts and ST) Of existing contract prices via PR? Slide 8 Finance: the choke on US expansion? Gas Strategies 20148 How do developers and financiers assess market risk? Which markets? Offtakers who do not yet have significant LNG experience? Is access to NBP an effective mitigant to price risk? Market risks Contractual risks Operational risks How robust and aligned are the contracts along the value chain? Can developers really insulate themselves from market risk? What happens if offtakers default or walk away from a project? Management of capacity holders, sometimes within a single train Inter-toller arrangements Responsibility for complete value chain Construction risks Equity investors taking construction risk: is it understood? New Contractors and new technology: how financeable and reliable? Slide 9 Findings and Conclusions Effect on Global Trade? Uncertainty prevails Perception of big opportunity especially for new entrants Finance is key Ripples around the world Gas Strategies 20149 Slide 10 What does it mean For developers? Structuring for finance and educating stakeholders Operating challenges along the value chain For offtakers? Global, and complex, risk profile Operational / management requirement to deliver the value chain For financiers? Recognise the different risk profile of US LNG and invest on that basis Be sure of mitigants Gas Strategies 201410


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