LNG Workshop Centrica LNG
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Transcript of LNG Workshop Centrica LNG
LNG WorkshopCentrica LNG11 February 2008
Simon Sydenham
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Presentation Outline
• Introduction
• Global LNG Market
• LNG access to the UK market
• Conclusions
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Introduction
• Centrica is UK largest buyer of gas and a supporter of liberalised energy markets
• As UK switches to being an importer of gas, then there is a requirement for new infrastructure
• Centrica has played a key role in encouraging the build of new gas infrastructure for the UK
• Centrica/Statoil contract => Langeled pipeline• Centrica/Gasunie contract => BBL pipeline• Centrica Reverse flow in Interconnector => enhanced reverse flow capacity
• Centrica is making significant investment in LNG • Regas capacity in Isle of Grain Phase 2 and 3• Upstream investment in Nigeria
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The original British Gas is back in LNG…
British Gas Canvey Island LNG Terminal January 1959: A World First: ‘Methane
Pioneer’
British Gas Isle of Grain LNG Terminal November 2008: A British First: ‘Al Khuwair’
““What a difference 50 years make…”What a difference 50 years make…”
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LNG importing countries are expanding
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Global Regas throughput utilisation is around 50%
Asia Regasification Utilization 2007 - 2009
0102030405060708090
100
Q1
Q2
Q3
Q4
Year Q
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Q2
Q3
Q4
Year Q
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Q2
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Year
2007 2008 2009
%
Europe Regasification Utilization 2007 - 2009
0102030405060708090
100
Q1
Q2
Q3
Q4
Year Q
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Q2
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Year Q
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Q2
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Year
2007 2008 2009
%
US Regasification Utilization 2007 - 2009
0102030405060708090
100
Q1
Q2
Q3
Q4
Year Q
1
Q2
Q3
Q4
Year Q
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Q2
Q3
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Year
2007 2008 2009
%
Global Regasification Utilization 2007 - 2009
0102030405060708090
100
Q1
Q2
Q3
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Year Q1
Q2
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Year Q1
Q2
Q3
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2007 2008 2009
%
CERA FORECAST
CERA FORECAST
CERA FORECAST
CERA FORECAST
ASIA EUROPE
GLOBAL
USA
• Utilisation can be defined in terms of slot, storage or throughput
• All LNG terminals are used at times for storage (particularly in Asia)
• Global regas terminal utilisation was below 50% for the whole of 2007
• This trend is forecast to continue though 2008 and 2009.
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Significant global regas facilities vs supplyProbable
Under Construction
Existing
Atlantic Basin
Middle East
Asia Pacific
Source: CERA/Platts/WoodMacPROBABLE REGAS
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100
200
300
400
500
600
700
800
900
2007 2008 2009 2010 2011 2012 2013 2014 2015
bcm
PROBABLE LIQUEFACTION
LIQUEFACTION UNDER CONSTRUCTION
ONSTREAM LIQUEFACTION
PROBABLE REGAS
GROWTH IN GLOBAL RELIQ & REGAS CAPACITY
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0
20
40
60
80
100
120
Feb-04
Jul-04
Dec-04
May-05
Oct-05
Mar-06
Aug-06
Jan-07
Jun-07
Nov-07
Apr-08
Sep-08
Feb-09
Jul-09
Dec-09
May-10
Oct-10
p/th
erm
NBP
Henry Hub
Continental Contract
Assumed Oil Linked Contract(16.6% Brent)
LNG should flow to the highest priced available market, but there are logistical constraints
Currently there are 4 main gas price structures
February 3rd Forecast
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LNG Buyers “playing field”
0
2
4
6
8
10
0 2 4 6 8 10
Market Liberalisation
LNG
Dep
ende
ncy
North America
China
GreecePortugalIndia
Italy
UK
Belgium
Turkey
South Korea
Taiwan
SpainFrance
Japan
Gas Index
10
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Jul-05
Sep-05
Nov-05
Jan-06
Mar-06
May-06
Jul-06S
ep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08S
ep-08
Nov-08
Jan-09M
ar-09
May-09
Jul-09
Sep-09
Nov-09U
tilis
atio
n R
ate
-25
-21
-17
-13
-9
-5
-1
3
7
11
15
19
23
Spre
ad $
/mm
btu
Lake Charles Utilisation IOG UtilisationNBP-HH Spread LT Asia - Atlantic SpreadSpot Asia - Atlantic Spread
Isle of Grain vs Lake Charles terminal utilisation
• 2005 – December 2008 utilisation based on UK/US Price differential
• 2008 – Asia price is higher than both UK and US prices
November 24th 2008 Forecast
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World LNG Imports for December 2008
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Capacity Holders
0
2
4
6
8
10
12
2005 2008
UK LNG Regas facilities
ISLE OF GRAINDRAGON LNG
Bacton
St Fergus
Easington
LNG can access the UK market via 4 terminals and regas capacity is held by 10 companies
2005 2008
SOUTH HOOK
TEESSIDE
Reags Capacity (bcm)
0
5
10
15
20
25
30
35
2005 2008
ISLE OF GRAIN
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NW Europe Regas• Increased supply sources and market
outlets
• Diversions can happen with short notice
BILBAO
SINES
HUELVA
SAGUNT0
CARTAGENA
BARCELONA
MONTOIR DE BRETAGNE
FOS SUR MERLA SPEZIA
ROVIGO
BRINDISI
DRAGON LNG ISLE OF GRAINZEEBRUGGE
TEESSIDE
SOUTH HOOK
EL FERROL
1 DAY
1 DAY
Construction ExistingShipping TimeLiquefaction Port
1 DAY
Snohvit
AlgeriaMiddle East
Qatar
Nigeria
Trinidad
GATE
10 DAYS
1 DAY
10 DAYS
3 DAYS
3 DAYS
1 DAY
11 DAYS
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Centrica LNG sourcing
• Centrica is actively looking to secure LNG supplies through:• Equity production• Term purchase contracts• Spot purchases
• Cargoes have so far been sourced from Qatar and Trinidad
• Multiple discussions are being held for future deliveries with increasing interest in the UK market
• Centrica intends to make maximum use of our capacity in Grain
• Final mechanisms that are in place are:• Centrica Secondary Capacity Mechanism (SCM)• Grain UIOLI mechanism
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Final Terminal Access Mechanisms
Centrica Secondary Capacity Mechanism• Auction process for a slot, temporary storage and deliverability• Centrica sends out LNG ahead of slot to create sufficient space for cargo• Cargo is sent our over period until next Centrica slot• Centrica retain option to swap LNG in store for NBP gas• User has a direct contractual relationship with the terminal• LNG must meet terminals gas quality specification• Ship must have undergone terminal vetting procedure
Example timetable• D-14 Notification of slot availability sent to registered users• D-13 User submits bid• D-12 If bid accepted, winner notified• D-11 User provides credit and supporting cargo information• D-10 Centrica begins emptying space• D0 Ship arrives and unloads• D+1 User begins withdrawal• D+9 Withdrawal ends• D+10 Next ship arrives
Grain UIOLI mechanism• Slot released to Grain at D-7• Grain advertise slot on Grain bulletin board
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Conclusions
• Global demand for LNG is greater than available supply• Average Regas utilisation is around 50%• The market for LNG supply is highly competitive• Gas market structures show significant differences
across the globe• Centrica is actively seeking LNG supplies for the UK
from a range of sources• Final access mechanisms are in place• Our contact details can be found on the Grain website.