David_thomas LNG Market Outlook

8/2/2019 David_thomas LNG Market Outlook

1/13

LNG Market OutlookPIP Annual Conference

Islamabad

April 2011


2/13

Page 2

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

About Vitol

Vitol is the worlds largest independent oiland gas trading company

44 consecutive years of profitable operations

Revenues of $190 Billion in 2010; nearly 400million metric tonnes of physical product delivered

Upstream assets across Central Asia, WestAfrica, and the Philippines

Pipeline gas portfolio in Europe and the USA, and

a global LNG portfolio

Over 5,600 ship charters per annum - the worldslargest spot charterer

Major oil terminal owner/operator, with over 8.5million cubic metres of capacity in operation and

under construction

Owner of two oil refineries: in UAE and Belgium

Numerous successful partnerships with privateand public sector companies

Revenues (Billion US dollars)

Volumes (million tonnes)

0

50

100

150

200

250

300

350

400

450

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


3/13

Page 3

Vitol LNG

Vitol started marketing and trading LNG in 2005 and iscurrently the largest independent LNG trader / marketer

Term supply and spot sales into Europe, Asia, India,

Turkey, and Kuwait

Extensive supply relationships with LNG producers inthe Atlantic, Mediterranean, Asia and the Middle East

Spot and term capacity at key LNG receiving terminals

LNG business is integrated with US and European gasbusinesses, complementing storage and cross-commodity pricing

Extensive ship chartering and fleet operation

Developing select LNG investments in liquefaction andregasification


4/13

Page 4Market is expected to tighten, even ifall projects completed on time

Medium-Term LNG Balances (Post-Japan tsunami)

Annual Balance (BCM)

2010 2011 2012 2013 2014 2015 2016

Exports

Asia 108 110 112 110 112 132 165

Middle East 102 129 132 132 132 131 131N America 1 0 0 0 0 0 0S America 23 27 27 27 27 27 33Africa 58 64 71 76 85 85 85Europe 5 5 5 5 5 5 5

Total 296 334 347 350 360 381 420

Imports

Asia 178 193 200 213 224 241 255Middle East 3 5 5 5 5 5 4N America 20 23 25 27 28 29 30S America 10 14 15 17 18 20 22

Europe 87 94 97 100 104 109 113

Total 297 329 341 361 379 404 424

Difference -1 5 6 -11 -19 -23 -4


5/13

Page 5

Medium-Term Asian LNG Demand

Probability: Volume: Start: 2010 2011 2012 2013 2014 2015 2016

Existing Importers:China Importing - - 12.9 16.5 19.2 24.9 27.3 33.6 36.7India Importing - - 12.1 13.7 13.2 13.2 14.8 17.2 19.8Japan Importing - - 94.3 100.1 100.0 101.5 102.5 103.5 104.5Korea Importing - - 44.1 45.9 47.1 48.3 49.5 50.8 52.0Taiwan Importing - - 14.8 15.9 16.5 17.1 17.5 18.0 18.5

Total - - - 178.3 192.0 195.9 205.0 211.6 223.1 231.5

New Importers:

Thailand High 6.8 Q3-11 1.5 3.0 4.0 5.0 5.5 6.0Malaysia High 4.7 Q3-12 0.5 1.0 1.5 2.5 3.0Singapore High 4.7 Q2-13 1.5 2.0 2.5 3.5Bangladesh High 5.5 Q1-13 1.0 2.0 3.0 4.0Pakistan Medium 4.7 Q4-14 0.5 2.0 3.0

Indonesia High 4.7 2014 1.0 2.0 3.0Vietnam High 1.4 2015 0.5 1.2Total - 38.4 - 0.0 1.5 3.5 7.5 12.0 18.0 23.7

Total Asia Demand 178.3 193.5 199.4 212.5 223.6 241.1 255.2

Projected Asian LNG Import Requirements (BCM)


6/13

Page 6

Global LNG Production Outlook

200

225

250

275

300

325

350

375

400425

450

2008

2009

2010

2011

2012

2013

2014

2015

2016

MediumProbability

HighProbability

Under-Construction

ExistingProduction

Projected LNG Liquefaction Capacity (BCM)


7/13

Page 7

Global LNG Production Outlook

0

50

100

150

200

250

300

350

400

450

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

AlgeriaAustralia

Brunei

Indonesia

Malaysia

Nigeria

Oman

Qatar

Trinidad

UAEOthers

Regional LNG Supply Developments (BCM)


8/13

Page 8

Supply

Maintenance

Unknowable Supply Disruptions (Unrest / Weather)

Start Dates Of New Capacity Incremental Capacity Creep / Field Maturity

Do Producers Max Output? Gas OPEC?

Demand

Price Impacts / Relative Price Against Other Fuels

Competition / Supply Constraints From Other Fuels

Contract Considerations

Weather / Natural Disasters Economic Activity

Long Term > Govt Mandates / Efficiencies

Regas > Increasingly Short Lead Times

Outstanding Issues


9/13

Page 9

Pricing

Currently there are three regional pricing markets:

Asia (oil indexed)

North America (Henry Hub pricing)

Europe (mixed: NBP, Henry Hub, oil)

Will there ever be global price convergence?

North America is still an island: geographically, and logistically,leading to a regional pricing basis

In Asia, alternative power feedstock is oil

European contracts vary

Emerging Middle East market (e.g., Dubai, Kuwait) attempting toavoid oil-based pricing, with mixed results


10/13

Page 10

Focus on Middle East LNG imports

Growing regional demandfor LNG

Originally planned as a short-to-

medium term solution, but couldbecome permanent part ofenergy mix

New projects under developmentin Bahrain, Bangladesh

Logistics for Arabian Gulfsuppliers can be attractive, butultimately the LNG will go to themarkets with the best netback to

the producers

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Jan

Feb

M

ar

A

pr

M

ay

Jun

J

ul

Aug

Sep

O

ct

Nov

D

ec

2008 2009

2010 2011

Middle East: LNG Imports (Mln Tons)


11/13

Page 11

What does this mean for Pakistan?

Acute energy shortages today, partly a result of declining domesticgas fields

All options seem to be under consideration: Conservation / efficiency efforts

Domestic exploration and production

Pipeline imports from Iran and Turkmenistan

Domestic and imported coal

Renewables, e.g., wind

Import more petroleum products

Import LNG


12/13

Page 12

LNG imports for Pakistan

Recent history:

LNG Policy of 2006 setting the framework for LNG imports

Mashal integrated project started in 2007 but aborted in 2011

Fast track LNG project started and stopped in 2009

Today: potential new government-led project, plus several privatesector initiatives

Important considerations:

The LNG market is tight and will tighten further over next 5-7 years

A straightforward technical and commercial structure will attract greaterinterest from experienced international companies and governments

Counterparty (ies) must have the ability to underwrite LNG terminaltariff and LNG supply. For a 2 million mtpa project this could reach 1.4 -1.8 billion USD per year


13/13

THANK YOU

PIP Annual ConferenceIslamabad

April 2011

David_thomas LNG Market Outlook

Documents

Transcript of David_thomas LNG Market Outlook