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LNG Market Outlook Thomas Vitol.pdf · Page 5 Medium-Term Asian LNG Demand Probability: Volume:...
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LNG Market Outlook PIP Annual Conference Islamabad April 2011
Transcript of LNG Market Outlook Thomas Vitol.pdf · Page 5 Medium-Term Asian LNG Demand Probability: Volume:...
LNG Market OutlookPIP Annual Conference
Islamabad
April 2011
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About Vitol
• Vitol is the world’s largest independent oil and gas trading company
• 44 consecutive years of profitable operations
• Revenues of $190 Billion in 2010; nearly 400 million metric tonnes of physical product delivered
• Upstream assets across Central Asia, West Africa, and the Philippines
• Pipeline gas portfolio in Europe and the USA, and a global LNG portfolio
• Over 5,600 ship charters per annum - the world’s largest spot charterer
• Major oil terminal owner/operator, with over 8.5 million cubic metres of capacity in operation and under construction
• Owner of two oil refineries: in UAE and Belgium
• Numerous successful partnerships with private and public sector companies
Revenues (Billion US dollars)
Volumes (million tonnes)
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Vitol LNG
• Vitol started marketing and trading LNG in 2005 and is currently the largest independent LNG trader / marketer
• Term supply and spot sales into Europe, Asia, India, Turkey, and Kuwait
• Extensive supply relationships with LNG producers in the Atlantic, Mediterranean, Asia and the Middle East
• Spot and term capacity at key LNG receiving terminals
• LNG business is integrated with US and European gas businesses, complementing storage and cross-commodity pricing
• Extensive ship chartering and fleet operation
• Developing select LNG investments in liquefaction and regasification
Page 4Market is expected to tighten, even if
all 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 165Middle 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 22Europe 87 94 97 100 104 109 113
Total 297 329 341 361 379 404 424
Difference -1 5 6 -11 -19 -23 -4
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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)
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Global LNG Production Outlook
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Projected LNG Liquefaction Capacity (BCM)
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Global LNG Production Outlook
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Algeria
Australia
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Regional LNG Supply Developments (BCM)
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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
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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 to avoid oil-based pricing, with mixed results
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Focus on Middle East LNG imports
• Growing regional demand for LNG
• Originally planned as a short-to-medium term solution, but could become permanent part of energy mix
• New projects under development in Bahrain, Bangladesh
• Logistics for Arabian Gulf suppliers can be attractive, but ultimately the LNG will go to the markets with the best netback to the producers
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Middle East: LNG Imports (Mln Tons)
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What does this mean for Pakistan?
• Acute energy shortages today, partly a result of declining domestic gas 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
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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 private sector 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 greater interest from experienced international companies and governments
– Counterparty (ies) must have the ability to underwrite LNG terminal tariff and LNG supply. For a 2 million mtpa project this could reach 1.4 -1.8 billion USD per year
THANK YOUPIP Annual Conference
Islamabad
April 2011
