gas glut, gas balance, natural gas future: which approach for gdf
TRANSCRIPT
Antoine de LA FAIREVP Gas Supplies
Brain Storming WorkshopThe future of the global gas market:
an EU-Russian perspective FEEM, LEPII, FINEC
Milano, October 1st, 2010
Gas glut,gas balance, natural gas future:Which approach for GDF SUEZ?
2
Table of contents
“The triple whammy”
GDF SUEZ approach
What’s next?
3
The triple whammy : an exceptional combination of factors
The most severe economic crisis since 1929: First ever decline in global gas demand due to the economic downturn (industry and power generation)
• - 2,1% worldwide and -5,9% in EU for 2009 versus 2008 (Source: BP Statistical Review of
World Energy 2010), same order of magnitude as for oil
Additional gas production capacity- New LNG projects on stream (Qatar, Yemen,…) over the period 2008-2011
- Unconventional gas in the US
Consequences on European markets : decline of gas market prices in 2009- Increased liquidity of spot gas markets- Price decoupling of European gas markets with oil indexed contracts
1
2
A potential global supply overcapacity of natural gas in the short to medium term (before mitigation reactions)
A limited volume impact: oversupply estimated at ~100 Bcm out of a global market of ~3000 Bcm
3
4
Declining demand: structural or temporary?A 11% recovery in average since beginning of 2010 (Jan-April,y/y) compared to -6% in 2009 : but around 40% only due to cold weather – gas demand is expected to grow by ~6 % in 2010, only 3% stripping out the effect of weather
Consumption remains steady even after end of winter season Gas demand recovery to fuel electric plants
Cera estimations: +3% in 2010 ; +4% in 2011
Gas consumption in OECD Europe- Source: IEA, Gaselys
Euro
peR
est
of t
he
Wor
ld
A 5% recovery in average since beginning of 2010 for the US (compared to -4% in 2009) mainly due to power generation sector and industrial sector.
Confirmation of recovery trend in Asia Continuous growth for China since 2008 despite the
economic crisis Gas demand recovery to fuel electric plants in South
Korea and Taiwan
Demand already recovering → structural effect in addition to weather effect?Coal/Gas merit order switching in favor to gas?
More energy efficiency benefiting from crisis leading to LT lower demand?
307
294
308
285
290
295
300
305
310
Jan-May 2008 Jan-May 2009 Jan-May 2010
Bcm
Total US gas demand in January-May 2010 compared to the same period of the past two years
-4%
+5%Source: DOE-EIA
5
Table of contents
“The triple whammy”
Which approach for GDF SUEZ?
What’s next?
Foreseeable markets evolutionsAnnual GDP variation (in %) - Source: CERA - June, 2010
Gas demand growth - Source: Wood Mackenzie
6
The supply-demand balance
7
Natural gas: Energy for the future⇒Beyond current crisis, world energy demand will continue to grow in the long run
8
1.The Reference Scenario describes a future in which governments are assumed to make no changes to theirexisting policies and measures insofar as they affect the energy sector
+ 1.5%/y between 2007 and 2030+ overall increase of 40%
Source IEA, World Energy Outlook 2009
World primary energy demand by fuel in the Reference Scenario1
+1.9 %/y
+0.9 %/y
+1.5 %/y
+1.4 %/y
+1.3 %/y
+1.8 %/y
9
Table of contents
“The triple whammy”
GDF SUEZ approach
What’s next?
Objectives- Secure gas supplies- Ensure gas competitiveness
GDF SUEZ’ competitive edge
- Major European gas player in terms of gas portfolio volume and diversification
- Long term partnerships- Upstream activities
Means put in place to face the crisis and to increase competitiveness
- Gas portfolio adjustments- Leadership consolidation in LNG- Development of new E&P projects- Reinforcement in gas positions
10
GDF SUEZ : a company with the will and the ability to innovate
GDF SUEZ’ long term partnerships
• Algeria (1965)• Netherlands (1967)• Russia (1975)• Norway (1977)• Nigeria (1998)
• Trinidad & Tobago (1999)• Libya (2004)• Egypt (2005)• Yemen (2009)
Others
Non regulated sales (key accounts, non regulated retail…)
Gas to power- PPA
Regulated sales (French retail & European regulated retail…)
REGULATED
Diversified supply portfolio provides flexibility
Balanced sales portfolio reduces volume risks
Long term gas supply
GAS TO POWER (INTERNAL)
NON REGULATED
1,196 TWh(1)
17
717
69
393 SHORT TERM
THIRD PARTY LONG-TERMCONTRACTS
1,196 TWh(1)
E&P PRODUCTION
OthersNorway
25%
Algeria13%
Russia16%
Trinidad &Tobago8%
Egypt 8%Netherlands11%
Middle East-Asia7%
UK 2%
Libya 3%
Others 7%
7
315
70
187
617
(1) 2009 estimated data (Group share) consistent with accounting consolidation methods used by the Group
Gas to power - merchant
11
Securing GDF SUEZ’ gas suppliesGDF SUEZ gas balance in TWh, end 2009
12
Ensuring gas competitivenessLong term contracts: necessary tools, adjustable to the gas industry needs
Buyer Seller
Price Formulae maintain gas competitiveness by indexing on competing energies prices
Initial price levels secure gas competitiveness vscompeting energies
Duration of contracts (10 to 30 years)
Guarantee of steady cash-flow
Off-take obligation (Take-Or-Pay clauses)
Guarantee gas competitiveness
Enables infrastructure financing
Enables development of end user market
Regular price reviews preservecontractual initial economic balance
Volume risk Price risk
Typical structure of long term contracts: shared risk risks between sellers and buyers
13
GDF SUEZ’ medium term LNG sales policy:Looking for opportunities outside Europe in the medium term in order to redeploy volumes towards markets with highest growth potential
• Gazprom Global LNG : 15 cargoes from 2011 to 2013• Kogas transaction : 41 cargoes from 2010 to 2013
A LNG leader, with strong positions on markets (1/2)
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
100,0
2006 2008 2010 2012 2014 2016 2018 2020
China
India
Non-OECD Asia 0,0
20,0
40,0
60,0
80,0
100,0
120,0
2006 2008 2010 2012 2014 2016 2018 2020
Japan
Korea
OECD Asia
LNG demand in non-OECD Asia (in Mt): LNG demand in OECD Asia (in Mt):
Source: Cera, 2010 Source: Cera, 2010
14
• Regasification terminal in Northern Chili
• Partnership between GDF SUEZ and Codelco(50/50)
• On February 24, first LNG cargo delivered by the «BM GDF SUEZ Brussels»
Mejillones terminal
A LNG leader, with strong positions on markets (2/2)
Supply in Europe and in the Atlantic Basin
Nord Stream: diversification of supplyroutes GDF SUEZ 5th Nord Stream AG shareholder
(9%) 2011: 1st 27.5 Bcm/y pipe 2012: 2nd 27.5 Bcm/y pipe
Touat: on-shore operator in Algeria GDF SUEZ (65%) & SONATRACH (35%) 113 Mboe reserves, including 111 Mboe of
gas 4.5 Bcm production in annual plateau
15
Investments selected in core value businesses for the Group (1/3)
Off-Shore operation in Norway: Gjoa
Main partner since 2003 GDF SUEZ 30 % Petoro 30 % Statoil 20 % Shell 12 % RWE 8 %
Main caracteristics: 13 wells (oil and gas) 350 to 370 m depth Pressure: 235 bar Temperature: 82°C
Development plan Start: oct. 2010 Production planned until 2024 Capacity: 87 000 bbl/ day
Investments: USD 3.9 billion
16
Investments selected in core value businesses for the Group (2/3)
Supply in Europe and in the Atlantic Basin
Development in Asia-Pacific
Australia: Bonaparte project (E&P and LNG):• In 2020, Australia should become the 3rd LNG exporting country• Strong LNG demand growth rate is expected in Asia-Pacific (more than 2/3 of
current global demand)
17
Investments selected in core value businesses for the Group (3/3)
18
GDF SUEZ/International Power deal reinforces GDF SUEZ positions in gas
GDF SUEZ IP will qualitatively benefit from its worldwide improved diversification and become the 1st European utility in terms of gas supply portfolio
Source: Annual reports, GDF SUEZ estimates, data on a consolidated basis
0
200
400
600
800
1000
1200
1400
GDF SUEZ+ IP
E.ON GDF SUEZ RWE New IP Gas NaturalFenosa
EDF IP
Total volume of gas sourced (TWh)
19
Natural gas, with its abundant resources, is the energy of choicetoward a greener economy
Thanks to its existing positions and its ability to innovate,GDF SUEZ is able to take full advantage of opportunities
Most of the impacts of the economic crisis on gas should betemporary but some uncertainties remain on longer term impacts
In the meantime, price decoupling has to be addressed betweenproducers and buyers so that natural gas can be economicallymarketed to end-user customers
CONCLUSION