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Development of global LNG market and recent trend

Takuro YamamotoLNG AnalystInternational Energy AgencyRiga, 23 June 2015

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LNG is the only method to deliver gas from continent to continent

(Source: GIIGNL)

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Number of LNG importing countries have tripled only in 15 years

Number of LNG importing countries, 2000 - 2014

Pakistan, Egypt and Jordan have already joined LNG importer’s club this year.

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The transition to more flexible market is under way

Spot and short-term LNG trade volumes and share, 2000 - 2014

Traditionally LNG was traded under inflexible long-term contracts, although we see more diversified trades these days.

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Destination free

Spot contracts

Re-exports

FLNG & FSRU

Henry Hub indexedOil indexed

Long term contracts

Destination clause

LNG fuels

Small scale LNG

Take or Pay

Short term contracts

As market grows, more opportunities and options as well as competitions

Joint tenderPanama Canal

Development of technology and infrastructure also helps expand the market.

Unconventional gas

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LNG market faced many events only in a decade

LNG import volumes by region, 2005 - 2014 (bcm)

Global LNG trade increased by 70% in past decade, with many countries and regions becoming LNG importer.

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The US shale gas revolution is the biggest game changer

LNG import volumes vs shale gas production in the US, 2007 - 2014 (bcm)

LNG imports to the United States are shrinking yearly, only receiving 1.6 bcm in 2014 against 200 bcm of receiving capacity.

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Low utilization rate with roughly 20% in Europe. Last resort?

LNG import volumes vs import capacity in OECD Europe , 2010 - 2014 (bcm)

In spite of LNG import capacity increases, LNG import volumes are following a downward trend in Europe every year.

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Nuclear accident has drove Japan to become more powerful LNG importer

Power generation by fuel in Japan, 2005 - 2013 (TWh)

Japanese LNG import volumes increased by 25% after the nuclear accident to cover the loss of nuclear power.

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Asian LNG demand has seen a slowdown

LNG import volumes in major Asian countries, 2010 - 2014 (bcm)

Total import volumes of Japan and Korea have been stabilized, along with slower growth in Chinese demand.

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Second wave of additional LNG supply is coming soon

Additional LNG capacity , 2005 - 2015 (bcm)

After three years with few new projects, second wave of large LNG additional capacities are coming from this year.

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Australia is expected to become the world’s largest LNG exporter

Top largest LNG exporters in 2020 (bcm)

17 new projects with total export capacity of 175 bcm are under construction as of today, with Australia and the United States accounting for roughly 80% of total.

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Will Asian and European prices converge?

Global gas price development in key regions, Apr 2009 - Feb 2015

Asian spot prices continued to slide in February and reached parity with European prices for the first time in four years.

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Transport sector is the fastest growing sector in gas market

Global gas demand by sector, 2014 – 2020 (bcm)

Global gas demand is forecast to increase at an average annual rate of 2% by 2020, with transport sector being the fastest growing end-user segment.

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Concluding remarks

• With 50 years of history, LNG industry is expanding globally and transforming to more flexible market.

• LNG will increasingly play an important role in meeting the global energy needs in terms of environmental measure.

• 2014 was a turning point in the global LNG market after three years of tightness.

• With ample supplies coming from Australia and the United States, along with weaker Asian demand, LNG will be more accessible in next five years.

• Transport sector is the fastest growing end-user segment by 2020.

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Thank you very much for your attention.