month 2008 © poten & partners 2008 confidential will non-oil indexation be the liberator of...
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MONTH 2008
© POTEN & PARTNERS 2008 CONFIDENTIAL
Will Non-oil Indexation be the Liberator of Asian Buyers?
MARCH 2014
Ming Cai, Senior LNG & Gas Analyst
Prepared for China International NC/CNG/LNG Distribution Conference
MONTH 2009
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MARCH 2014Page 2
Poten & Partners 简介• 全球 LNG 和天然气行业的权威专
家• 40 位专家 , 5 位权威顾问,总共超
过 600 年的能源行业经验• 自 2005 年起,在 54 个国家,完成超
过 400 个咨询项目
• Poten 的专家曾在相关行业的各大领先企业担任高层决策者
• 全方位的产业链服务——最好的技术与商业结合
上游开采 液化工厂 船舶运输 再气化终端及下游应用
REGIONAL MANAGER
EXPLORATION & PRODUCTION MANAGER
VICE PRESIDENT & CFO, (CABOT LNG)
SENIOR LNG PROCESS ENGINEER
VICE PRESIDENT, OPERATIONS & TECHNOLOGY
MANAGER, INTERNATIONAL GAS
GENERAL MANAGER, COMMERCIAL
GENERAL MANAGER, LNG OPERATIONS, STASCO
GENERAL MANAGER, NLNG & BGT
SENIOR VICE PRESIDENT, NATURAL GAS BUSINESS
BECHTEL
CHEVRON
NOW GDF SUEZ
KBR
KOGAS
MARATHON
NORTH WEST SHELF
SHELL
TOTAL
MITSUBISHI
MONTH 2009
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MARCH 2014Page 3
提供世界一流的专业技术分析和精确详尽的成本分析
• Poten 通过与 Merlin Associates 的并购整合,正式成立了 Merlin Advisors
• 结合两家全球顶级的 LNG 行业咨询服务提供商强大的技术力量和人脉网络, Merlin Advisors 可为客户提供最专业最全面的技术分析支持
• Merlin Advisors 可为客户提供如下五大类专业咨询服务• 项目的技术可行性分析• 项目资本 / 成本性分析• 项目的技术 / 商业 / 船运的尽职调查• 项目各类技术评估• 项目技术 / 商业方面的基准化分析( Benchmark Analysis )
• 通过与多个项目的成本数据进行对照比较, Merlin Advisors 可以为客户提供精确度在 ± 10% 以内的项目成本分析
MONTH 2009
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MARCH 2014Page 4
涵盖全球超过 75% 的 LNG 项目融资相关的尽职调查
MONTH 2009
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MARCH 2014Page 5
我们的服务涵盖了液化天然气的整个产业链
上游
中游
下游
项目公司
国际性油气企业
各大国有油气企业
燃气与电力企业
贸易公司
金融机构
政府
合同商
工业用户
其他机构
项目开发支持
企业战略
合同谈判
尽职调查
地区的政策分析
LNG船运分析
天然气开发策略
市场分析
技术评估
市场销售以及采购策略
企业类别 咨询项目类别产业链
包括天然气的储运1
1
MONTH 2009
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MARCH 2014Page 6
Pricing in world gas markets is fragmented
Oil Products
Henry Hub/ NBP / Brent
JCC/Brent
NBP
Oil-linked marketsGas-on-gas markets
? ??
Shale gas driven Henry
Hub
East Africa
?
Current Regional LNG Prices
OIL PARITY
Asia LT*($16.0/MMBtu)
UK ($11.4/MMBtu)
USA ($4.2/
MMBtu)
Note*: Represented by Japanese average LNG price in December, 2013.
Source: Poten & Partners
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MARCH 2014Page 7
0
5
10
15
20
25
J an-04 J an-05 J an-06 J an-07 J an-08 J an-09 J an-10 J an-11 J an-12 J an-13
$/M
MBtu
Recent divergence among regional gas prices
Gas and Oil Price History
Oil-linked LNG
prices
Gas-on-gas
market prices
JCC
Japan LNG
NBP
Henry Hub
Pre shale gas revolution Post shale gas revolution
Major trends• Shale
revolutions in US• Oil price boom
in the world market
• Fukushima nuclear crisis
• Diversion of available LNG volumes from the Atlantic Basin to Asia Pacific
Source: Poten & Partners
MONTH 2009
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MARCH 2014Page 8
• HH price averaged $5.8/MMBtu from 2004-08 (hereafter, the “Historical High” case)• This is higher than average JCC price
for the period
• For a 20-year, 1 MMt/y contract, the Historical High average price would yield a $5.9 billion loss for a buyer who purchased LNG under HH-linked price rather than oil-linked price
.
HH-linked price is not “cheap” historically
0
5
10
15
20
Current Base(2009-2013)
Historical High(2004-2008)
$/M
MBtu
J KT LNG New signed oil-linked Hybrid HH-linked
2.9
-5.9
-10
-5
0
5
10
Current Base(2009-2013)
Historical High(2004-2008)
bill
ion
$ fo
r 20
yea
r
Major pricing comparisons under Current Base case and Historical High case
$2.8 ($5.8)
Source: Poten & Partners
MONTH 2009
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MARCH 2014Page 9
• HH price has been below $5/MMBtu since early 2010
• However, HH price has exceed $8/MMBtu twice in February 2014• This is equivalent to $12.7/MMBtu LNG
FOB price.
• HH volatility never ends, especially in the winter peak season!!!!
Volatility has recently returned to US gas market
0
3
6
9
12
15
18
$/M
MB
tu
$8.1/MMBtu
Historical HH spot price
Source: EIA
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254
3364
203
0
50
100
150
200
250
300
ApprovedFTA
PendingFTA
ApprovedNon-FTA
PendingNon-FTA
MM
t/y
Huge potential for US LNG exports
Planned US LNG export volume by region
• About 290 MMt/y of announced US liquefaction capacity in total in DOE’s list
• Only two trains at Sabine Pass are under construction, totaling 9 MMt/y capacity• Freeport LNG & Expansion, Lake Charles ,Cove Point and Cameron have got DOE approval to
export LNG to non-FTA countries, but are still waiting for approval from the Federal Energy Regulatory Commission (FERC).
MONTH 2009
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MARCH 2014Page 11
• EIA forecasts for HH in 2035 range from $11/MMBtu to $6/MMBtu
• HH-linked price DAP Asia could range between $13/MMBtu and $19/MMBtu by 2035
Uncertainty exists among future HH forecasts
0
5
10
15
20
2015 2020 2025 2030 2035
2013
$/M
MBtu
HH-linked High
HH-linked Base
Oil-linked*
HH-linked Low
HH High
HH Base
HH Low
*oil-linked price based on average oil price of $94.4/bbl during the period from 2009 to 2013;
HH-linked price forecast based on EIA’s forecast
Source: Poten & Partners
MONTH 2009
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• Heavy-weighted HH-linked portfolios (P7, P11,P12) show different characteristics under different market environment• Historical High (2004-2008): low volatility, high price.• Current Base (2009-2013): low volatility, low price.
Portfolio performance varies towards price environment
0
2
4
6
8
10
12
14
16
- 1 2 3 4
$/M
MBtu
Standard Deviation
P11P12
P7
0
2
4
6
8
10
12
14
16
- 1 2 3 4
$/M
MBtu
Standard Deviation
P11
P12P7
Price analysis of alternative portfolios of HH and oil-indexed contracts – average vs. standard deviation
Historical High (2004-2008) Current Base (2009-2013)
Source: Poten & Partners
MONTH 2009
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MARCH 2014Page 13
Three scenarios used to test 2004-13 portfolio prices
Oil-linked HH-linked NBP-linked0
5
10
15
20
LN
G p
rice
($
/MM
Btu
)
Base, high and low cases used for our demonstrative portfolio simulation
High
Base
Low
• Low & Base case: Price Oil-linked < Price HH-linked
• High case: Price Oil-linked > Price HH-linked
Source: Poten & Partners
• Base: Historical average prices (JCC/HH/NBP)
• Low: Base prices - 1.5 sigma
• High: Base prices + 1.5 sigma
MONTH 2009
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Optimal goal to move towards efficient frontier
11.0
11.5
12.0
12.5
13.0
13.5
- 1 2 3 4
$/M
MBtu
Standard Deviation
Optimization approachHeavy-weightedHH-linked
Heavy-weightedoil-linked
Better-distributedportfolio
Efficient frontier
Better-distributedportfolio including NBP
Portfolio efficient frontier: average price vs. standard deviation
• Minimize risk at a given expected price; or
• Achieve the best (lowest) expected price at a given risk level.
Source: Poten & Partners
• Heavy-weighted oil-linked portfolio: lower price but high volatility• Add more HH-linked contracts to significantly reduce its volatility
• Heavy-weighted HH-linked portfolio: higher price but low volatility• Add more oil-linked contracts to reduce its portfolio price
Efficient frontier
MONTH 2009
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Multi-tranche approach to pursuit optimized portfolio
0
1
2
3Profitability
Price VolatilityProject Risks
0
1
2
3Profitability
Price VolatilityProject Risks
• Start with lower supply risk supply to guarantee base requirement is met
• As portfolio diversifies, move toward a more balanced approach
• A more detailed practical approach is required to take more real world factors into account and help Asian buyers to design a customized procurement strategy – Poten has developed real practices on this
Multi-tranche approach to pursuit optimized portfolio
Source: Poten & Partners
MONTH 2009
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MARCH 2014Page 16
• Recent high oil prices and low HH prices have spurred Asian buyers to seek non-oil indexation in Asia Pacific
• However, Asian buyers face large risks in accessing non-oil linked supplies
• Portfolio price performs differently (price & risk) under different market conditions
• Asian buyers are required to optimize their portfolio price• Minimizing the overall price risk under different market prospects and• Achieving the lowest LNG portfolio price at a similar risk level
• In their pursuit of an optimized portfolio, Asian buyers should consider:• Current position;• Future expectation;• Ability to take / mitigate risks;• Ability to secure LNG via non-oil linked contracts and negotiate with a lower oil-linked contracts.
Conclusion
MONTH 2009
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General Disclaimer
This material has been compiled by gathering market intelligence from various public and industry sources which is subject to limited validation procedures and may include estimates or judgments. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, Poten & Partners (Australia) Pty Ltd, together with its affiliates and their respective officers, directors, employees and agents disclaim any liability (including without limitation any liability arising from fault or negligence) for any loss arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation should not be distributed or otherwise reproduced.
MONTH 2009
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MARCH 2014Page 18
NATURAL GAS & LNG CONSULTING CONTACTS:
AMERICAS (NEW YORK)Contact: Jim Briggs
Email: [email protected]: +1 212 230 2000
EUROPE, M. EAST, AFRICAContact: Graham Hartnell
Email: [email protected]: +44 20 3747 4820
ASIA PACIFICContact: Stephen Thompson
Email: [email protected]: +61 8 6468 7942
AMERICAS (HOUSTON)Contact: Daryl Houghton
Email: [email protected]: +1 917 2225 7636