globalization of the asian gas market apec lng workshop chinese taipei march 21-23, 2005

March 21, 2005

Globalization of the Asian Gas Market

APEC LNG WorkshopChinese Taipei

March 21-23, 2005

March 21, 2005

Asia Pacific Gas Demand

to Power Bright Outlook!

6-7%

10

20

30

40

50

60

7019

75

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

BC

FD

OtherTransRes/CommIndusPower

0

Source : Facts

March 21, 2005

Asia Pacific Gas Demand

0

2000

4000

6000

8000

10000

12000

14000Ja

pan

Indo

nesi

a

Chi

na

Mal

ay

Aus

Indi

a

Pak

Kor

ea

Thai

Ban

g

Taiw

an NZ

S'P

ore

Phi

li

HK

Bru

Mya

n

Vie

t

MM

CFD

20032015

Emerging Markets With Regional

Influence

Source : Facts

March 21, 2005

Asia Pacific Gas Imports

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000Ja

pan

Indo

nesi

a

Chi

na

Mal

ay

Aus

Indi

a

Pak

Kor

ea

Thai

Ban

g

Taiw

an NZ

S'P

ore

Phi

li

HK

Bru

Mya

n

Vie

t

MM

CFD

20032015

Emerging Markets With Regional

Influence

Source : Facts

March 21, 2005

Global Connectivity: LNG ImportsGlobal LNG Demand mtpa

Full History & Projection

Asian Market Share - % of Global Demand40%

50%

60%

70%

80%

Past LNG –“Asia’s Exclusive”

Future LNG – –

Global Market LinkingGlobal Market Linking

In the past, Asia’s LNG imports amounted to as high as 80% of world LNG trade and was disconnected from Europe & US gas markets.

With increase in US & EU LNG imports, there will be greater influence from linkage with global trade.

0

50

100

150

200

250

300

350

400

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Europe/USAAsia

March 21, 2005

0

50

100

150

200

250

300

350

400

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Africa/OtherMiddle EastAsia-Pacific

Global LNG Exportsmtpa

Full History & A Scenario Projection

0%

20%

40%

60%

80%

Past LNG –“Asia’s Exclusive”

Future LNG – –

Global Market LinkingGlobal Market Linking

Asia-PacificAsia-Pacific

Middle EastMiddle East

Asia-Pacific vs Middle East LNG Exports Share - % of Global LNG

Such linkage is further reinforced along the supply side with greater expansion of Middle East LNG into the Atlantic Basin supplying EU/USA as well as Asia Pacific markets.

Global Connectivity: LNG Exports

March 21, 2005

Market Fundamentals

Growth – strong fundamentals with developing economies- Strong demand continues for natural gas in Asian markets - Large emerging regional markets in China and India- Large Markets of US and EU still growing due to declining &

expensive domestic options

Connectivity – linkage of global & regional markets- Growth in US & Europe LNG imports from the Middle East

increasing- Asia Pacific markets linkage to the US West Coast projected - North Asia Customers diversifying as new green-field plants are

developed – Reliability is paramount!

Asian Gas

March 21, 2005

Asia Power: Gas vs Coal

Asia Pacific Power Generation

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2002 2015

GW

h

RenewablesNuclearGeothermHydroGasOilCoal

While gas is the preferred environmental fuel, coal will continue to dominate and gas will have to compete more against coal in emerging markets.

Though Coal will face more opposition .

Nuclear will also face more political constraints and limits the amount of coal that could be mitigated by nuclear.

March 21, 2005

Gas-Fired GTCC Beats Alternatives

(Gas Prices @ $3.00 - $5.00/MMBtu)

POWER GENERATION COST @ 80% CAPACITY FACTOR

0.0

1.0

2.0

3.0

4.0

5.0

6.0

New CC ST FO ST Coal Nuclear

CAPITAL O & M Coal $1.80 Coal $2.20 Coal $2.60 NG/FO $3.00 NG/FO $3.50 NG/FO $4.00

¢/kWh

8,500 Btu/kWh

$800/kW $1,000/kW $2,500/kW$500/kW

9,400 Btu/kWh

7,100 Btu/kWh

6.0 - 6.5¢/kWh FO $30/bbl

FO $ 24FO $ 21FO $ 18

NG $ 5.0 $/MMBTUNG $ 4.5NG $ 4.0 NG $ 3.5NG $ 3.0

Coal $ 64 /tonCoal $ 56/tonCoal $ 48Coal $ 40

March 21, 2005

Indigenous Piped NG (PNG) > Imported PNG >

Imported LNG > Imported Coal >

Oil - Economics – Efficiency - Environmental- Income for the country from taxes and royalties.- Support of the building of infrastructure.- Security of supply.- Job creation across the upstream value chain

Fuel Priorities

March 21, 2005

0

40

80

120

160

200

240

1

Asia-Pacific LNG

Existing & projects Existing & projects targeting Asia-Pacifictargeting Asia-Pacific

PotentialPotential

Exi

stin

g E

xist

ing

Under Under ConstructionConstruction

ContractedContractedTargetedTargetedProbableProbable

Possible Possible

By 2008 Base Demand exceeds currently contracted supply capacity! By 2008 Base Demand exceeds currently contracted supply capacity!

CapacityCapacity

Asia-Pacific LNG Demand Forecast

0

40

80

120

160

200

240

1997

2000

2003

2006

2009

2012

2015

2018

mtp

a

Low Base High

March 21, 2005

Recent LNG Pricing TrendsRecent LNG Pricing Trends

Indications are that current high oil & coal prices and outlook for US LNG imports are already exerting some influence ….

GuangdongGuangdong

5.00

6.00Oil P

arity

Oil Parity

Japan-CurrentJapan-Current

Basic Landed LNG Price - Japan

0.00

1.00

2.00

3.00

4.00

7.00

8.00

9.00

10 15 20 25 30 35 40 45 50

Oil ($/Bbl)

$/M

MB

TU

“Market”

March 21, 2005

Lake Charles Terminal &Trunkline Receipt Point

March 21, 2005

Lake Charles Terminal ($/mmBtu)

Jan - 05 Feb - 05 March – 05

Henry Hub Forward @ 11/30/2004 7.62 7.72 7.56

HH & Trunkline Basis differential - 0.06 - 0.06 - 0.06

Trunkline@ 10/29/2004

@ Receipt points

7.56 7.66 7.5

Terminal Cost & Send Out 0.42 0.42 0.42

Ex-Ship Price 7.14 7.24 7.08

Shipping Cost

- Qatar to GoM (9696 Nm)-Poten & Partner 1.54 1.54 1.54

- Malaysia to GoM (12151 Nm)- Shipping model 1.87 1.87 1.87

FOB Price

- Qatar 5.60 5.70 5.54

- Malaysia 5.27 5.37 5.21

March 21, 2005

Lake Charles Terminal ($/mmBtu)

Apr - 05 May - 05 June – 05

Henry Hub Forward @ 12/31/2004 6.06 6.09 6.13

HH & Trunkline Basis differential - 0.05 - 0.05 - 0.05

Trunkline @ Receipt points 6.01 6.04 6.08


Ex-Ship Price 5.59 5.62 5.66

Shipping Cost

- Qatar to GoM (9696 Nm)-Poten & Partner 1.54 1.54 1.54

- Malaysia to GoM (12151 Nm)- Shipping model 1.87 1.87 1.87

FOB Price

- Qatar 4.05 4.08 4.12

- Malaysia 3.72 3.75 3.79

March 21, 2005

Zeebrugge Terminal ($/mmBtu)Jan - 05 Feb - 05 March – 05

IPE Closing Price @ 11/30/2004* 7.67 7.53 6.18

Average Zeebrugge – NBP Basis Differential (10/1-12/7/2004)** - 0.92 - 0.92 - 0.92

Zeebrugge LNG Terminal Outlet point 6.75 6.61 5.26


Ex-Ship Price 6.33 6.19 4.84

Shipping Cost

- Qatar to Zeebrugge (6606 Nm)-Shipping model 1.08 1.08 1.08

- Malaysia to Zeebrugge (9169 Nm)- Shipping model 1.21 1.21 1.21

FOB Price

- Qatar 5.25 5.11 3.76

- Malaysia 5.12 4.98 3.63

*IPE futures prices are based on UK-National Balancing Point (NBP)** Negative sign indicates Zeebrugge price< NBP price & vice versa

March 21, 2005

Zeebrugge Terminal ($/mmBtu)Apr - 05 May - 05 June – 05

IPE Closing Price @ 12/31/2004* 5.18 4.86 4.72

Average Zeebrugge – NBP Basis Differential (10/1-12/31/2004)**

- 0.84 - 0.84 - 0.84

Zeebrugge LNG Terminal Outlet point 4.34 4.02 3.88


Ex-Ship Price 3.92 3.60 3.46

Shipping Cost

- Qatar to Zeebrugge (6606 Nm)-Shipping model 1.08 1.08 1.08

- Malaysia to Zeebrugge (9169 Nm)- Shipping model 1.21 1.21 1.21

FOB Price

- Qatar 2.84 2.52 2.38

- Malaysia 2.71 2.39 2.25

*IPE futures prices are based on UK-National Balancing Point (NBP)** Negative sign indicates Zeebrugge price< NBP price & vice versa

March 21, 2005

Strong demand continues to hold energy prices in new band$40+/bbl oil / $6.00+/mmbtu gas / $60+ ton coal

New green-field LNG plants not keeping up with demand projections in the short-term

Market access to North America and Europe allows LNG to flow to highest value market – Spot Markets are emerging

LNG Prices begin to be set by Global Indices e.g. Henry Hub

Volatility in the markets will allow trading opportunities for those with receiving terminals

Asian LNG Price Conclusions

March 21, 2005

5 64321Dock-1

Dock-2Dock-3

HGFE

A

DBC

LPG Tanks

Year Capacity On-Line MM MT/Yr.TRAINS A/B 1977 5.377TRAINS C 1983 5.377TRAIN E 1989 2.875TRAIN F 1993 2.912TRAIN G 1997 2.912TRAIN H 1999 3.136

22.589

With 8 trains running, the capacity of the plant has reached 22.59 MT/year LNG, 1 MT/year LPG and 10 Mbbl/year condensates.

Bontang LNG Plant

March 21, 2005

Unocal Indonesia Gas Developments

Bontang Unocal DevelopmentPlans

West Seno - Operational

Greater Gendalo – 2008/9

Greater Gehem – 2011/12

West Seno HubCapacity =

100 MMSCFD

Greater Gehem Hub Capacity =

300 – 500 MMSCFD

Greater Gendalo Hub Capacity =

550-650 MMSCFD

New Unocal supply of ~1 BCFD refills

Bontang LNG Plant

March 21, 2005

Unocal’s Vision and Values

globalization of the asian gas market apec lng workshop chinese taipei march 21-23, 2005

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