forecasting the future of the lng market(1)

Forecasting FLNG

© 2011 ODS-Petrodata. All Rights Reserved.

Kelvin Sam and Kamila Langklep6th FLNG Asia-Pacific Summit

June 2011

History as a playbook

Agenda

1. Overview2. Lessons from LNG and FPSO

3. FLNG demand/capacity

4. Conclusion


2

Increasing FLNG activity seen

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� Only EPC awards to a contractor are included – FEED excluded.

� Shell sanctioning Prelude, the first FLNG project in the world in 2011

� Flex awarded contract for Papua New Guinea

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2010 2011 YTD

MT

PA

FLNG awards

Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd

Shell - Prelude

FLEX - Liquid Niugini

FLNG and onshore LNG target different markets

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FLNG used for smaller gas fieldsFLNG used for smaller gas fields

Australia Pacific LNG

Browse LNG

Curtis LNG

Delta Caribe LNG

Gladstone LNG-Santos

Gorgon LNG

Ichthys LNG

Kitimat LNG

Pluto LNG

PNG LNG - ExxonMobil

Qatargas II

Sakhalin LNG

Shtokman

Snøhvit

Donggi/Senoro

Wheatstone LNG

BW Offshore

Flex LNG

Hoegh LNG

Shell

SBM Offshore

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500

1,000

1,500

2,000

2,500

0 2 4 6 8 10 12 14 16 18

Pro

ject C

ost

(MM

US

D/m

tpa)

Project Capacity (mtpa)

Integrated Project Costs of Selected Onshore Projects vs. FLNG Concepts- without the overlapping cost of subsea infrastructure, wells and offshore facilities

Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd. Source: ODS-Petrodata, Supplier publications

Who will be the key FLNG contractors?

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Onshore LNG contractors partner yards for FLNGOnshore LNG contractors partner yards for FLNG

Chiyoda23%

Bechtel19%

KBR16%

JGC15%

Technip10%

Saipem4%

Foster Wheeler

3%

CB&I1%

Other9%

Onshore Liquefaction Capacity by Contractor- Share of Installed Capacity - June 2011

Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd.


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Hyundai HI Samsung HI Engevix DSME Dalian shipyard

Shanghai Waigaoqiao

Fene Shipyard

IHI Qingdao Behai

Hu

lls

FPSO hull newbuilds2003-2011

Delivered Under construction


FPSO yard Largest dock – length x breadth x depth (metres)

Hyundai HI 672 x 92 x 13

Samsung HI 640 x 98 x 13

DSME 530 x 131 x 14

Dalian yard 550 x 80 x 13

Shanghai Waigaoqiao 480 x 106 x 12

IHI 350 x 90 x 7Source: ODS-Petrodata


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SBM and NOV in good position for FLNG workSBM and NOV in good position for FLNG work

SBM33%

NOV31%

MODEC17%

LMC5%

Bluewater4%

Teekay4% Others

6%

FPSO turret supplier2003-2010


Agenda

1. Overview2. Lessons from LNG and FPSO3. FLNG demand/capacity

4. Conclusion


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#1 FLNG build-out will be a gradual process

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� Oil and gas industry is normally slow to accept new technology.

� Annual LNG construction exceeded 5 mtpa only 15 years after the first

plant.

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1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

mtp

aHistorical EPC Demand for Onshore LNG Liquefaction Facilities


#1 FLNG build-out will be slow and gradual

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� Development of the FPSO industry was equally slow.

� First FPSO delivered in 1977 to Shell.

� Only a few units under construction until the late 1990s.

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FP

SO

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FPSOs under construction

Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd FPSO construction requires 2-4 years

#1 Long road to first FLNG project

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First FLNG project required 15 years from concept to sanctionFirst FLNG project required 15 years from concept to sanction

#2 Early movers are normally leaders…

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#3 …at the expense of margins

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� LNG and FPSO contractors often sacrifice margins for market share.

� Margins have been volatile and low.

� Contractors may also compete aggressively for FLNG work.

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25.0%

2003 2004 2005 2006 2007 2008 2009 2010

Operating profit margin

Chiyoda Technip (Onshore) Saipem (Onshore) Samsung HI Hyundai HI


#3 …so don’t expect exclusive alliances!

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#4 Expect cyclical FLNG demand

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Nu

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er o

f Aw

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sA

wa

rde

d C

ap

acity (m

tpa

)Number and Capacity of Awarded EPC Contracts for Onshore LNG Plants

Awarded Capacity Number of Awards

Jan-June


Volatility creating urgency for contractors to secure FLNG soonVolatility creating urgency for contractors to secure FLNG soon

#4 Expect cyclical FLNG demand

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FP

SO

s

FPSO contract awards

Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd Source:ODS-Petrodata

Volatility creating urgency for contractors to secure FLNG soonVolatility creating urgency for contractors to secure FLNG soon

Agenda

1. Overview2. FLNG lessons from LNG and FPSO

3. Demand/capacity4. Conclusion


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Higher steel/equipment prices and salaries driving FLNG costs higher

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� Cost model refers to a FLNG unit with 2.5 mtpa of LNG and 0.5 mtpa of

condensate and LPG

� Expect costs to increase by 12.9 per cent in 2011

� Salaries increasing by 7-8 per cent in 2011

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-30%

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No

min

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x (2

00

3 =

10

0)

Yea

r o

n Y

ear

Ch

an

ge

Cost Model - FLNG

Y-O-Y Change [USD based]

Cost Index (2003=100) [USD based]

Source: ODS-Petrodata, Date: May 18, 2011Protected by Copyright (c) 1986-2011 ODS-Petrodata Ltd.

Lead times favorable, but increasing

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� Lead times somewhat favourable

� A return to the 2008 peak is unlikely this year but growing lead time is likely

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2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2011 June

Mo

nth

s

Gas Compressor

Gas Turbine

Heat Exchanger

Turret and swivel

Proteced by Copyright (c) 1986-2011 ODS-Petrodata Ltd.

Estimated lead times: Selected FLNG equipment

South Korean yards have more work now…

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� Backlog includes non-FPS work such as rigbuilding and shipbuilding

� South Korean yards getting more drillship and ship orders

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50

100

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1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11

Inde

x 1

Q0

6 =

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0Shipyard total backlogs in local currencies

Samsung HI DSME Hyundai HI


…are fully booked till 2013 but still keen on FLNG

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� FPSO newbuilds, semisubmersibles/TLP and rigs shown because:

� Offshore projects

� Require similar capacity (docks) and construction time (3-4 years)

� Big projects (at least USD 500 million)

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Un

its

South Korea oil and gas projects* by delivery year**

Samsung HI

Hyundai HI

DSME


*Includes rigs, FPSO, semi submersibles and TLPs** Deliveries based on contractual dates for rigs and first oil for production units

Onshore LNG contractors have some spare capacity

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

mtp

a

Contractor Involvement in the EPC of Onshore LNG Liquefaction Facilities - Awarded Projects vs. EPC Demand

Other

CB&I

Linde

Toyo Eng.

Saipem

Foster Wheeler

Technip

WorleyParsons

Bechtel

JGC

KBR

Chiyoda

EPC Demand


� LNG backlogs peaked in 2009 but is increasing again

� Sufficient capacity for demand. Eg. Technip currently has no onshore LNG work

� 2011 is a window of opportunity for FLNG developers

Growth to be strong in 2011-2015 but..

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� Growth forecast from 2011-2015

� Asia-Pacific is a major source of demand

� 1-2 FLNG awards expected annually since FLNG is still at an early stage of

development

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mtp

a

Visible/Forecast EPC Demand for FLNG

South America

Asia-Pacific

Forecast


…is dependent on a small base of projects

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Abadi - Inpex

Bonaparte - GDF Suez, Santos

Cash/Maple - PTTEP

Chuditch/Bilby/Wombat - Flex LNG

Crux - Nexus, Osaka Gas

Scarborough - BHP, ExxonMobil

Prelude - Shell

Sunrise - Woodside and partners

Tassie Shoal - MEO

Liquid Niugini Gas/Flex LNG

Elk-Antelope - Petromin PNG

Pandora - Talisman EnergyMalaysia - PETRONAS

Nemed - Shell

OML 122 - Peak

Nnwa/Doro - Statoil, Shell

Gulf of Guinea - Gasol

Gabon reserves - Shell

Pre-Salt - Petrobras

Basra, associated gas - Shell

*

Visible FLNG Projects

Block 5 - BG Group

Conclusions

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FLNG activity will be growing. But don’t expect continuous growth… …or every operator to accept

FLNG.

Capacity is somewhat favourable but is becoming tighter,

So 2011 is a window of opportunity for operators to award contracts .

Competition among contractors will be fierce

Contact Us


Should you have any questions or need additional information,

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www.ods-petrodata.com

26

Visible FLNG projects


27

Project Country Operator Capacity (MTPA)

FID Planned first gas

Prelude Australia Shell 100% 3.6 Sanctioned 2016

Crux Australia Nexus 85%, Osaka Gas 15% 2.0 2011 2016

FLEX - Liquid

Niugini

Papua New

Guinea

InterOil 50%, Pacific LNG Operations

50%

2.0 2011 2014

Santos basin pre-

salt

Brazil Petrobras 51.1%, BG 16.3%, Repsol

16.3%, Galp 16.3%

2.7 2011 2017

PETRONAS

FLNG

Malaysia PETRONAS 60%, MISC 30%,

Mustang 10%

1.0 2011/2012 2014

Cash/Maple Australia PTTEP 100% 2.0 2012 2016

PNG FLNG Papua New

Guinea

Petromin PNG, Hoegh LNG and

DSME

3.0 2012 2014

Sunrise Australia Woodside 33.4%, Shell 26.5%,

ConocoPhillips 30%, Osaka Gas 10%

4.0 2012 2016

Abadi Indonesia INPEX 90%, PT EMP Energi 10% 2.5 2013 2018

forecasting the future of the lng market(1)

Documents

odspetrodata ltdagenda1

flng project

flng build

flng demandcapacity4

flng worksbm33

flng concepts

key flng contractors

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