cyprus oil & gas association may 2017
TRANSCRIPT
Presented by: Andy Varoshiotis BSc, MBA, IAFP, EIET, MSDT
Energy Technology - Strategy – Energy Financial Services
ANNUAL GENERAL MEETING
Under the auspices of the Cyprus Chamber of Commerce and IndustryMAY 25th, 2017
Under the auspices of the Cyprus Chamber of Commerce and Industry
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•LNG Industry Outlook
•Floating Storage and Regasification Units
•Floating Storage Units + Regasification
•Floating Liquefied Natural Gas
www.cyoilgas.org“Building the new energy economy”
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AGENDA
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LNG Market Outlook - KEY FIGURES
263.6 million tons imported in 2016 or a 7.5% increase vs. 2015.
74.6 million tons traded on a spot or short term basis or 28% of total trade.
73% of global LNG in Asia.
30% of global LNG volumes supplied by Qatar.
45% of global LNG volumes supplied from the Pacific Basin.
4 New Importing Countries – 11 New LNG Regasification Terminals.
39 Importing Countries.
830 MTPA Total Regasification capacity – 19 Exporting Countries.
340 MTPA total Nameplate Liquefaction Capacity.
Source GIIGNL Annual Report 2017
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FSRU/FSU – Important Facts
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FSRU/FSU – Price Projection
LNG will probably trade at $6 to $8/MMBtu through 2020 amid slowing demand in core marketssuch as Japan, South Korea and China, according to Citigroup. That compares with $7.10 as ofSeptember 2014, according to the World Gas Intelligence publication. Prices jumped 72% in 2011 asJapan shut its reactors after the Fukushima nuclear disaster. They peaked at $19.70 in February2014.
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LNG SHIPPING – 2016 Highlights
The total LNG tanker fleet consisted of 478 vessels at the end of 2016.
It included 24 FSRU and 30 vessels of less than 50.000 cubic meters.
The total shipping capacity at the end of 2016 stood to 69.3 million cubicmeters. Total operational capacity amounted to 64.7 million cubic meters.
In 2016 the average spot charter rate for a 160.000 cubic meters LNGcarrier stood at $33,528/day, compared to an average $36,038/day in2015.
10 new orders were placed in 2016, including one FSRU and 3 bunkering vessels, compared with 33 new orders placed in 2015.
64 vessels were scheduled for delivery in 2017.
Source GIIGNL Annual Report 2017
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FSRU – Industry overview
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FSRU – Industry overview
At a time when commodity producers are writing down billions in asset values andcancelling projects around the world, one niche area of the gas market is booming.Hybrid ships, called Floating Storage and Regasification Units, or FSRUs, offer emergingnations a cheaper, quicker way to attack power shortages, reduced green houseemissions, by importing liquefied natural gas (LNG). Use of LNG fuel results in 20%lower GHG emissions compared with Heavy Fuel Oil (HFO).
They cost about $300 million to build, or half as much as an onshore import terminal,and are up and running as much as six times faster, sometimes within as little as ayear.
A conversion from an existing tanker could take as little as 20 months while a newbuild could take under three years. Currently, there are 24 FSRU operating asalternatives to onshore regasification terminals globally, and another six of them tobe completed through 2017, bringing total capacity to 4.4 million cubic meters,according to Poten and Associates data. Competition to supply FSRUs has cut costs ofleasing such vessels by 20% to about $120,000/day from five years ago. The averagedaily rate for a new FSRU is $150,000/day vs. an FSU vessels with separateregasification for about $55,000/day.
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30 projects are active worldwide for fast track LNG import: 24 units at the end of 2016 with cargo capacity 3.6 million cubic meters, 6 of these vessels scheduled for 2017.
– India– Chile– Brazil– Indonesia– Bahrain– Benin– Uruguay– Bangladesh– South Africa– Jordan– Puerto Rico– Namibia– Ghana
FSRU – Industry overview
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FSRU – Industry overview
• FSRU – New builds or retrofits. Depressed charter rates have stirred new interest infloating, storage and regasification units (FSRU). FSU’s are also in play given attractivelylow valuations of $18 million to $35 million. Such carriers are typically 30 years and olderwith Moss containment system of 125,000 m³. Regasification is installed separately onland or floating.
• Terminal owners – Domestic gas companies– Independent developers– LNG players
• Capex– FSRU new build USD225m – USD350m– FSRU marine terminal infrastructure – USD80m – USD400m
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FSRU/FSU – Regasification Process
Once the 300-meter (1,000-foot) vessels are moored, LNG is transferred from arrivingtankers through cryogenic pipe lines. The LNG, chilled to minus 162 degrees Celsius(minus 260 Fahrenheit), is then converted – heated onboard/land FSRU or FSU + R intogas and typically used onshore at a nearby power plant.
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Mooring Options
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FSRU/FSU – East Med FSRU PROJECTS
Israel: Hadera Deepwater LNG Terminal
Excelerate Energy: (National Oil Varco – Micoperi) STL buoy system located over six milesoffshore. Six months delivery time. Terminal Cost $150-million. IEC is also payingExcelerate $400-450 million for 5 years ending in October 2017. Last November, IEC askedto extend the agreement and received the permission of the Electricity Authority toprolong it for two additional years, until 2019. Capable of up to 600 MMcf/d delivery rate.Provides Israel with the ability to import LNG to Israel directly, augmenting Israel’s energysecurity. Using the terminal, the national transmission system can receive 2.5 billion cubicmeters of natural gas annually, representing half of the country’s gas needs.
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Med FSRU – Egypt Projects
Singapore-based gas shipping giant BW said its,used as Egypt’s second LNG import terminal in AinSokhna Port. Fast-track schedule – 5 months fromproject inception to first gas.
170,000 cbm,regasification capacity of 750 mmscfd.Storage capacity of 170,000 cbm of LNG and maximumsend-out capacity of 360 mmscf/d of regasified LNGEquipped with reinforced membrane-type cargocontainment system that facilitates offshore loadingoperation.
Contract5 years from April 2015
Vessel OperationLNG import terminal (FSRU) in Ain Sokhna, Egypt
FSRU BW SingaporeFSRU Höegh Gallant
Contract5 years from April 2015
Vessel OperationLNG import terminal (FSRU) in Ain Sokhna, Egypt
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Med FSU + Regasification
MALTA FSU + Regasification (Delimara Power/Regasification Terminal)
FSRU positioned in Marsaxlokk harbour to receive/store/regasify LNG to supply adjacent 200MW power plant. BOOT Agreement. Capex Euro 370 million. Operator BimiArmada.
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LNG BANKERING - INFRASTRUCTURE
The upcoming ECA standards came into force onJanuary 1, 2015 and according to the UK TransportSelect Committee, this will trigger an 87% rise in annualfuel bills for the shipping industry. LNG, seen as one ofthe most economical and environmentally viable fuels,offers the most plausible solution to this.
Vasilikos Energy Hub17
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East Med – Cyprus (FLNG)?
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An FLNG facility makes it possibleto economically get at gas that istoo far from shore to bepractically harvested and sent toland. It is this that can inducefinanciers to risk their capital for a10-year payback.
Eni East Africa SpA Coral liquefied Natural Gas (FLNG).
Shell Prelude (FLNG). Cost US 11. BillionPetronas’ Floating LNG Facility (PFLNG 1), Malaysia
Production start-up is expected for the end of 2019.
168.3 MTPA Proposed FLNG capacity.
PFLNG 1 is scheduled to come online in 2017 Prelude FLNG expected to begin operations in 2017.
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Cyprus Shipping Ranks No 3 in EU and in the 10 top in the World
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Great Opportunity for Cyprus Fleet to expand
1. Security and diversity of energy sources are of paramount importance and will requiresubstantial investment that has to be underpinned by Government cooperation.
2. The SE Med is evolving as a new area for Energy Investors with major gas discoveriesbut the commercialization is affected by Geopolitics and gas prices that willundoubtedly come under pressure due to new discoveries competing with gas comingfrom Russia, Azerbaijan and LNG imports.
3. Pipelines, CNG, FLNG, naturally lend themselves as an ideal means to export gas tothese regional markets. An FSRU/FSU + R will set the cornerstone for LNG importsbefore 2020.
4. An FLNG on Aphrodite Block 12 can produce 2.5 Mtpa of LNG where 1.0 Mtpa will beabsorbed by the Electricity Authority of Cyprus and the remaining 1.5 Mtpa can beexported to Asian markets where demand will continue into the next decade. Acombination of an FSRU and an FLNG will set Cyprus into the global LNG arena as a keyproducer and LNG user with the attraction of tremendous investments ininfrastructures.
Conclusions
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Please visit www.cyoilgas.org for information and updates
THANK YOU FOR YOUR ATTENTION
Cyprus Oil & Gas AssociationMember Services & Inquiries CCCI Head officeDeligiorgis 8, & Grivas DhigenisNicosiaCyprusE-Mail Address: [email protected]
Dept. of Services and TradeCyprus Chamber of Commerce and IndustryPolis PeratikosDirect Line: +357 22 889706E-Mail Address: [email protected]
QUESTIONS?
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