Natural Gas Regional Integration Challenges Qatar & Yemen 317 From Europe, Qatar, Egypt & ... Map -...

© IPD Latin America – All rights Reserved 1

Natural Gas Regional Integration Challenges

Prepared for 21st International Natural Gas Convention & 10th Industrial Exhibition AVPG 2015 by IPD Latin America, LLC

May 21, 2015


IPD Latin America provides consulting services with a focus on country risk analysis, business development, and government relations strategies in the Colombian, Mexican and Venezuelan oil, gas, and power sectors. IPD’s teams, based in Caracas, Mexico City, Bogota, and Miami, provide timely, detailed insight with a local perspective. Our services are designed to integrate with our clients’ specific business development strategies. IPD’s reporting, in-depth studies, and workshops are all structured to offer an efficient means of understanding and tracking the complex political, regulatory, and commercial environments in which we work. IPD’s multi-disciplinary team has experience in business development, finance, economics, government relations, regulatory affairs, and political science. All are completely bilingual in English and Spanish. IPD Latin America has been providing government relations and business development advisory services in Venezuela since 1999, in Mexico since 2001, and in Colombia since 2009.

Credentials


Disclaimer

USE OF MARKET AND INDUSTRY DATA This presentation contains an analysis of certain macro economic and political trends with respect to the Venezuelan oil industry. We believe that the information contained herein has been collected in compliance with all applicable laws from a variety of market, industry, and government agency sources, as well as industry data prepared by us on the basis of our knowledge of and experience in the industries in which we operate (including our estimates and assumptions relating to such industries based on that knowledge.) This information is meant for attendees’ internal analysis of these trends for their strategic planning. It is not meant to be the basis for trading any company’s securities. In this regard, each attendee has its own independent obligation to comply with applicable laws, including federal securities laws and federal anti-bribery laws, and have in place suitable internal policies to address its employees’ compliance with these laws. This report includes market and industry data that has been obtained from third party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s estimates and assumptions related to such industries). Management’s knowledge of such industries has been developed through its experience and participation in these industries. While our management believes the third party sources referred to in this report are reliable, neither we nor our management have independently verified any of the data from such sources or ascertained their underlying economic assumptions. Internally prepared and third party market or industry forecasts, in particular, are estimates only and may be inaccurate, especially over long periods of time. In addition, the underwriters have not independently verified any of the industry data prepared by management or ascertained the underlying estimates and assumptions relied upon by management. Furthermore, references in this report to any publications, reports, surveys, or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey, or article. The information in any such publication, report, survey, or article is not incorporated by reference in this report. This report contains what are called forward-looking statements such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, which should not be read as a guarantee of future performance or results, and will not necessarily be accurate indicators of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. In light of the foregoing, IPD is not responsible for any damage suffered by any recipient of this report beyond the specific limitations contained in any agreement that we are a party to.


Natural Gas Reserves & Supply in Latin America

12.3

5.5

11.1

3.44

11.2

2.02

15.9

2.06

5.7

1.22

15.4

1.18

12.4

4.14

198

2.75

T&T

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

MMCFD Gas Supply

Mexico Trinidad & Tobago ArgentinaVenezuela Brazil BoliviaColombia Peru

Proven Reserves (TCF)

2013 Supply (BCFD)

Source: IPD based on BP Statistical Review 2014 and PDVSA 2014 Annual Report

35.5 TCF non-associated (18%)


Natural Gas Supply & Consumption in Latin America

5.5

8.0

3.44

4.64

2.02

<0.1

2.06

3.64

1.22

1.03

1.18

0.63

4.14

2.17

2.75

2.95

T&T 2013 Consumption (BCFD)

2013 Supply (BCFD)

0.42

0.06

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

MMCFD Consumption

Mexico ArgentinaBrazil VenezuelaTrinidad & Tobago ColombiaPeru ChileEcuador

Source: IPD based on BP Statistical Review 2014


Main Gas Trade In & Out of Latin America

504

1,034

1,803

8

40

350

241

203

343

325

215

398 To Spain, UK, China, Japan, South Korea & Taiwan 7

302 To Spain, Japan &

South Korea

58 From Qatar &

Yemen

317 From Europe, Qatar, Egypt &

Nigeria

253 From Europe, Qatar, Algeria,

Angola, Egypt & Nigeria

4

Source: IPD based on BP Statistical Review 2014 and other sources

464 From Europe, Qatar, Yemen,

Nigeria & Indonesia

Figures in MMCFD 5.0 BCFD of gas traded in Latin America in 2013

3.5 BCFD by pipeline 1.5 BCFD by LNG 1,8 BCFD of gas traded out of the region • 0.7 BCFD sent out of the

Americas • 1.1 BCFD brought into the

Americas from other regions


US Shale Gas: A Game Changer

Sources: Map - IPD based on EIA data; Graphs - EIA

State’s Proven reserves 2013

(TCF)

State’s 2013 Production

(TCF)

308

159

0

50

100

150

200

250

300

350

Conventional Shale Gas

U.S. Natural Gas Reserves (TCF)

0

5

10

15

20

25

30

35

2007 2008 2009 2010 2011 2012 2013

U.S. Shale Gas Production (BCFD)

Rest of US

Antrim (MI)

Barnett (TX)

Fayetteville (AR)

Woodford (OK)

Bakken (ND)

Eagle Ford (TX)

Haynesville (LA&TX)

Marcellus (PA&WV)

31.7

2.5

11.5

1.5

44.3

3.0

12.2

1.0

12.7

0.7

18

0.5

5

0.3

1.4

0.1

Barnett

Bakken

Woodford

Fayeteville

Niobrara

New Albany

Haynesville


Expected Market Trends & Drivers: Regional Prices

• Regional dynamics are shifting.

• The most recent EIA STEO indicates that the Henry Hub price will stand at around US$ 4.00/ MMBTU for 2014-2015.

• Such prices, increased U.S. production, and future exports (2018) will impact Latin America gas markets:

o The U.S. will no longer be a viable market destination for LatAm gas supply. o Price competition / lower netback challenge for T&T and other potential exporters to

gain/consolidate market share within and outside Americas (i.e., Asia, Europe). o U.S. exports will compete with local gas markets. New production in the region will need to come

online at competitive prices (i.e., Mexico and Colombia -- unconventionals and offshore). o Latin American importers may benefit from lower prices, but will have to compete for cheap gas due

to higher netback with other destinations.

0

1

2

3

4

5

6

7

ene-

14

mar

-14

may

-14

jul-

14

sep

-14

no

v-1

4

ene-

15

mar

-15

may

-15

jul-

15

sep

-15

no

v-1

5

ene-

16

mar

-16

may

-16

jul-

16

sep

-16

no

v-1

6

US$

/MM

BTU

Henry Hub Natural Gas Price

Historical spot price

STEO forecast price

NYMEX

High scenario

Low Scenario


Expected Market Trends & Drivers: New Global Supply

Area 4 (Mozambique) ENI

~84 TCF GIIP

Block 2 (Tanzania) Statoil/Exxon ~20 TCF GIIP*

Tamar/Leviathan (Israel) Noble Energy

~10/19 TCF GIIP

Area 1 (Mozambique) Anadarko

~50-70 TCF GIIP

Aphrodite(Cyprus) Noble Energy ~5 TCF GIIP

Tupi /Lula (Brazil) Petrobras

~5-7 TCF GIIP

Vaca Muerta Play (Argentina)

Various ~802 TCF GIIP

US Shale Gas ~665 TCF GIIP China Shale Gas

~1,115 TCF GIIP


Expected Market Trends & Drivers: International Prices to Converge?

0

3

6

9

12

15

18

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

US$

/MM

BTU

Japan CIF (LNG) Avg. German CIF (LNG)

UK NBP Henry Hub

Panama Canal expansion

2016

Mozambique’s discoveries (~150 TCF) in Areas 1 and 4 production on-line

2019-2020

Israel’s Leviathan field (19 TCF) production on-line

2017

• Shale gas developments in the U.S., Argentina, China and others • Brazil Pre-salt developments

Source: IPD based on BP Statistical Review 2014 and other sources

U.S. gas exports begin

2018


Closing Remarks

• The increase in U.S. shale gas production has significantly impacted regional market dynamics.

That effect will deepen when the U.S. becomes a net exporter in 2018.

• Worldwide future incremental supply will press prices downward and make premium markets

(i.e., Asian & South American) converge with mature markets like the U.S.

• Access to capital is key to monetize gas reserves in Latin America. LNG and regasification plants

are capital intensive -- a significant challenge when prices are low.

• Project execution and cost efficiency will determine competitiveness.

• Pipeline, CNG, and electricity are other, less capital-intensive options for short distance market

opportunities.


David Voght – Managing Director Tel. +1 305 767 2177 [email protected] Patricia Ventura – Senior Consultant Tel. +58 412 623 5205 [email protected] Alfredo Urdaneta – Senior Consultant Tel. +58 412 623 5206 [email protected] Juan Palma – Gas Technical Advisor Tel. +58 426 607 8979 [email protected] Joel Guedes – Advisor M&A, JVs and Corporate Finance Tel. +58 412 623 5207 [email protected]

Dri

vin

g Su

cc

ess

ful En

erg

y D

ev

elo

pm

en

t

mailto:[email protected]





Natural Gas Regional Integration Challenges Qatar & Yemen 317 From Europe, Qatar, Egypt & ... Map -...

Documents

Transcript of Natural Gas Regional Integration Challenges Qatar & Yemen 317 From Europe, Qatar, Egypt & ... Map -...