creating favorable investment climates and economic ......creating favorable investment climates and...

Creating Favorable Investment Climates and Economic Conditions for Natural Gas in the

Indo-Pacific

The Role of Government Officials

Andreas D. Thanos

15 September 2020

Why?

15-Sep-2020

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198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019

CO2 Emissions by Region(million tons)

North America S. & Central America Europe CIS Middle East Africa Asia Pacific

Source: BP Statistical review 2020

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Why?

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North America S. & Cent. America Europe CIS Middle East Africa Asia Pacific

Primary Energy Consumption (Exajoules)

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Why?

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1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Energy Consumption -- Asia Pacific(Exajoules)

Oil Natural Gas Coal Renewables


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Why LNG?

• Abundant

• Competitively Priced

• Environmental Benefits

• Easily “Transportable”

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Abundant

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

LNG Exports by Region (Bm3)

Americas Europe & CIS Middle East Africa Asia Pacific

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Price Can be Independent of Cartels

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2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Price ComparisonUSD/Million Btu

Japan - LNG Japan Korea Marker -LNG US -Natgas OECD Crude

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Combustion of Natural Gas is a Cleaner Process


Environmental Benefits #2

• LNG/Natural Gas is the only fuel that can be relied on to generate electricity when intermittent renewable sources are not available. • Speed of ramping up

• Lower emissions

Andreas D. Thanos15-Sep-2020 9

Importance of LNG

• An essential element of a country’s energy mix. Examples

• Philippines

• India


Philippines

Andreas D. Thanos

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1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Coal Million TOE

Gas Million TOE

Oil Million Tons

Philippines’ Energy Consumption (1965-2018)select fuels

Source: BP Statistical Review 2019

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India

Andreas D. Thanos

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196519671969197119731975197719791981198319851987198919911993199519971999200120032005200720092011201320152017

Coal Million TOE

Gas Million TOE

Oil Million Tons

India's Energy Consumption (1965-2018)select fuels

Source: BP Statistical Review 2019

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Why LNG?

• Lower CO2 emissions

• Can be transported like oil; vessels/non-pipes alternative

• Not subject to cartel-based price fixing

• Abundant

• After initial infrastructure development, expansion to address growth is easier

• Power generation

• Commercial & Industrial (processes, fertilizer, heating, cooling)

• Residential (heating, cooking, hot water)

• Transportation (marine and land-based)


LNG Production to Market

Andreas D. Thanos

Gas Production, Liquefaction & Storage

↓

LNG Carrier

↓

Import Terminal – Regasification

↓

Gas Pipelines – Power Plants – End Users

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Cooperation Between Government Agencies

• Importance of cooperation between various agencies:


Cooperation Between Government Agencies(lessons to learn from/reference)

• In the U.S. there are 3 primary entities that are involved in the LNG process: US DOE, FERC and PHMSA• US DOE authorizes exports/imports

• FERC: Environmental, Economic, Energy Policy

• PHMSA: Safety

• Involvement in the LNG market was established when the U.S. was an LNG importer

• Cooperation continues and the agencies continue in their efforts to streamline the process.


Impediments to Development of Market

• Domestic Laws

• Project Financing

• Development of Infrastructure

• Alliances between countries (defense, political or trade)

• Cabotage


Domestic Laws

• Ownership of Market / Tax Revenue

• Facilitate the process of infrastructure development


Domestic Laws

• Laws to encourage the development of the proper infrastructure• Construction of Facilities

• Environmental concerns

• Transmission and local distribution systems


Project Financing

• Allowing the development of a privately owned, yet regulated, market will encourage investment

• Investment will lead to competition

• Competition will lead to more efficient pricing

• Efficient pricing will lead to additional investment


Development of Infrastructure

• Location of Import Terminal• Access to one customer

• Access to a region

• Allow for the inevitable possibility of expanding both import as well as regasification capacity

• Facilitate the initial development and future expansion of transmission and distribution systems


Alliances Between Countries

• Political and Other Alliances

• Trade Disputes

• Domestic Needs of Producing Nations (Australia)


Cabotage Laws

• “Coastal Trading” laws restrict the movements of certain vessels along ports within the same country.

• In the United States coastal trading is regulated by the 1920 Jones Act which exclusively reserves marine transportation between two points in the U.S. to vessels built, owned and flagged in the United State that are also manned by U.S. citizens.


Government Actions

1. Decide to remove dirtier fuels from energy mix

2. Decide to encourage the development of a privately held energy market

3. Establish strategy to review and authorize LNG/Natural Gas infrastructure development

4. Ensure appropriate cooperation among government agencies to ensure the development of an LNG import infrastructure and market

5. Remove any unnecessary barriers/impediments (tariffs/cabotage)

6. Ensure a proper regulatory regime that minimizes regulatory costs while it ensures least cost, efficient and environmentally beneficial delivery of natural gas


Recommendation

• The United States as a whole and individual states within the Union possess over 100 years of experience in the development and regulation of natural gas infrastructure and markets.

• The U.S. through trial and error, success and failure has reached a point of being both a significant producer and consumer of natural gas

• Government agencies like FERC & PHMSA at the Federal level, and state regulatory agencies can provide invaluable advice on matters relating to policy, infrastructure development and rate-making, among others


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Thank you

Andreas D. Thanos

[email protected]@adthanos.com

www.linkedin.com/in/adthanoshttps://twitter.com/ADThanos
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creating favorable investment climates and economic ......creating favorable investment climates and...

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