Global LNG and SE Asia’s rapidly emerging need for net imports · Global LNG and SE Asia’s...

SE Asia’s thirst for gas turns global

Global LNG and SE Asia’s rapidly

emerging need for net imports

March 2015

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Who is Risco Energy?

March 2015 SE Asia’s thirst for gas 2

Focused on upstream oil & gas asset investment in ASEAN


Longer term trends set the scene

• The industry is focused now on dealing with rapid

change in hydrocarbon prices

• The energy mix changes

• The balance of demand shifts

• New sources of energy emerge – shale gas, tight

oil, ultra deepwater, renewables

• Production and consumption are affected by

weather and disruptions like war, civil unrest

• New policy measures bolster climate change

concerns and energy security

Continuous change is the norm

Continuous change

Energy mix

Demand balance

New sources of supply

Economies expand / contract

War / weather

Climate change

Energy security


The energy challenge Dealing with continuous change is the norm


Outline

Global LNG: rebalancing pricing and supply

LNG: The role of Asia and the rise of Southeast Asia

SE Asia LNG in transition: from supplier to major demand market

• SE Asia: a key contributor to global gas demand growth

• Gas deficits drive rising import need = LNG

• Evolution of SE Asian regas buildout - big challenges abound



Globally, LNG is

rebalancing pricing and

supply



Oil-linked LNG prices have halved

LNG price (Japan landed)

(historical and forecast)


Source: Credit Suisse 2015

Oil price linkage has driven LNG prices below recent bands


Tight supply near-term

LNG supply and demand scenarios



Supply is tight near-term, in 2020’s all “possible” supply needed for demand


Energy security: Japan to diversify supply

Japan LNG supply sources 1975-2025



Japan is reducing concentration risk and by diversifying LNG supply sources


Japan is an example of a switch to gas

Asia key driver of LNG demand growth


Source: IEA

Gas nearly doubled its share of Japan’s energy mix from 2000 to 2012 at 11.3%


Gas & LNG:

The role of Asia



Asia: the biggest driver in global LNG trade

Global LNG import growth

(% change yoy)


Asia accounts for 75% of global LNG buying

Source: Facts Global Energy, 2015


Japan 49%

South Korea 23%

China 11%

Rest of Asia 17%

Asian LNG demand: Korea & Japan dominate

Asia’s LNG buyers

By volume (2013)


Biggest in the world: Japan and Korea account for 72% of Asia’s LNG buying

Source: BP Strategic Review of World Energy 2014


50% of global gas net imports to Asia by 2035


Gas trade balances LNG demand by region

Asia trumps Europe as World #1 gas importer in 2020’s via increased LNG supply

Source: BP Energy Outlook 2035


SE Asia LNG in

transition: from supplier

to major demand market



5% 10%

16% 21%

24%

38% 41%

18%

43% 32%

44% 33%

38%

44%

67%

33%

29%

32%

30%

21%

14% 1%

0%

0%

0%

4%

0% 0% 7%

7% 22%

2% 7%

3% 1% 2% 7%

0% 1% 2% 0% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

China Philippines Vietnam Indonesia World Malaysia Thailand

Renewables

Hydro electric

Nuclear

Coal

Oil

Natural Gas

SE Asian primary energy mix is light on gas

Primary energy mix by fuel type


Most of SE Asia is well below global average for gas use

Source: BP Strategic Review of World Energy 2014, Risco Energy


SE Asian gas and LNG demand rising strongly

Asian LNG demand and associated drivers


Source: Wood Mackenzie 1Q 2013

SE Asia set to become a significant LNG demand market on rising gas demand


Gas deficits drive rising

import need = LNG



SEA LNG regas capacity: big expansion

LNG regas capacity in SE Asia


Source: Wood Mackenzie 1Q 2013

Strongly increasing demand needs supply sources beyond just PNG


Evolution of SE Asian

regas buildout



ASEAN LNG Regas: Existing 6 existing regas facilities


Source: IHS February 2015, Risco Energy. Note: Arun LNG start February 2015.

Nusantara (OS)

Lampung LNG (OS)

Arun LNG

Jurong Island LNG

(Phase I & II)

Lekas LNG (Malacca)

Map Tha Phut (Phase I)

Existing

Under construction

Under development

Proposed

Liquification LNG

(OS) = Offshore


ASEAN LNG Regas: + Under Construction 1 under construction regas facilities


Source: IHS February 2015, Risco Energy. Note: Pagbilao set to start during 2015.

Nusantara (OS)

Lampung LNG (OS)

Arun LNG

Jurong Island LNG

(Phase I & II)

Lekas LNG (Malacca)


Philippine LNG Hub

(Pagbilao)

Existing

Under construction

Under development

Proposed

Liquification LNG

(OS) = Offshore


ASEAN LNG Regas: + Under Development 2 under development regas facilities


Source: IHS February 2015, Risco Energy

Nusantara (OS)

Lampung LNG (OS)

Arun LNG

Jurong Island LNG

(Phase I & II)

Lekas LNG (Malacca)


Philippine LNG Hub

(Pagbilao)

Map Tha Phut (Phase II)

Philippine LNG Hub

(Pagbilao) Ext

Existing

Under construction

Under development

Proposed

Liquification LNG

(OS) = Offshore


ASEAN LNG Regas: + Proposed 19 proposed regas facilities



Nusantara (OS)

Banten (Bojonegara) LNG

Lampung LNG (OS)

Cilacap (OS)

Cilamaya (OS)

East Java (EWC)

East Java (OS)

Tanjung Benoa LNG

Tanjung Benoa LNG (OS)

Lahad Datu LNG

Eastern Singapore LNG Jurong Island LNG

(Phase III)

Arun LNG

Jurong Island LNG

(Phase I & II)

Pangerang

LNG (Petronas)

Pangerang LNG (Dialog)

Lumut

Lekas LNG (Malacca)

Pekan/Pahang LNG



Son My Ph. 1 A/B, 2 & 3

Thi Vai Onshore

Philippine LNG Hub

(Pagbilao)

Philippine LNG Hub

(Pagbilao) Ext

Bataan LNG (OS)

Bantangas (OS) Batangas LNG

(OS) (First Gen)

Mindanao (OS)

Existing

Under construction

Under development

Proposed

Liquification LNG

(OS) = Offshore


ASEAN LNG Regas: + Liquification LNG 6 liquification LNG facilities



Nusantara (OS)

Banten (Bojonegara) LNG

Lampung LNG (OS)

Cilacap (OS)

Cilamaya (OS)

East Java (EWC)

East Java (OS)

Tanjung Benoa LNG

Tanjung Benoa LNG (OS)

Lahad Datu LNG

Eastern Singapore LNG Jurong Island LNG

(Phase III)

Arun LNG

Jurong Island LNG

(Phase I & II)

Pangerang

LNG (Petronas)

Pangerang LNG (Dialog)

Lumut

Lekas LNG (Malacca)

Pekan/Pahang LNG



Son My Ph. 1 A/B, 2 & 3

Thi Vai Onshore

Philippine LNG Hub

(Pagbilao)

Philippine LNG Hub

(Pagbilao) Ext

Bataan LNG (OS)

Bantangas (OS)

Batangas LNG

(OS) (First Gen)

Mindanao (OS)

Existing

Under construction

Under development

Proposed

Liquification LNG

(OS) = Offshore


Themes from

Indonesia’s flegling

regas build out



Outline

Key themes and challenges for successful LNG import integration

• Build it, but don’t assume LNG supply will come

• Getting gas to demand needs more than pipes

• Government support essential – policy, regulation, strength

• Japan: holy grail of energy security flexibility?



• Uncontracted LNG supply tight to 2019

• Indonesia’s existing regas capacity is <40% utilized

• LNG buying is competitive & has established players

• New comers off take and payment credibility an issue

• Technical and commercial capability essential

3/10/2015 SE Asia’s thirst for gas 27

Build it, but don’t assume supply will come LNG regas facilities do not guarantee access to supply


• Integrated and effective movement / downstream

• Open access to gas markets

• Open access to market pricing – mindset change from

producer subsidized gas prices

• Politics can conflict with commercial economics


Getting gas to demand needs pipes Gas needs to reach demand and be viable when it does


• Government to government interaction can help

• A massive coordination and implementation role

• Balance sheet needed to secure supply.

• Balance sheet use/enticing infrastructure investment

• Government/SOE skill set is not commercial, it is policy

• Regulatory support and improvement

“Unlocking SE Asia’s energy efficiency potential requires government action to address a wide spectrum of barriers.” IEA World Energy Outlook – SE Asia, 2013


Government support essential Geopolitical and financial aspects to LNG require government support


Japan’s success in adjusting to events

• Japan demonstrated an incredible ability to rapidly and significantly adjust its fuel mix with the 2011 Fukushima nuclear disaster.

• Nuclear accounted for 13% of its fuel mix in 2010 and just 1% in 2012, with the balance being rapidly taken up by gas and to a lesser extent oil.

• While the catalysing event was obviously a most terrible disaster, Japan’s ability to so rapidly respond to events is a clear demonstration of energy security.

• An ability to deal with ‘known unknowns’.

• This ability is the prize that comes with effective energy demand mix management.

• “Improving energy efficiency would deliver major energy security, economic and environmental benefits” IEA World Energy Outlook – SE Asia, 2013


#1 Japan: holy grail of energy security? The successful end result is providing energy security

Channeling energy into action.

Global LNG and SE Asia’s rapidly emerging need for net imports · Global LNG and SE Asia’s...

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