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PECHORA LNG Corporate Presentation

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Page 1: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

PECHORA LNG

Corporate Presentation

Page 2: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Russia in the context of global natural gas market

Top 10 by Reserves of Natural Gas

Market overview

Top 10 Gas Exporters

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Top 10 Gas Producers

Top 10 LNG Producers

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Source: BP Energy Review, 2011

Page 3: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Gas reserves Oil reserves Gas production Oil production

The cumulative proven reserves of natural gas – 560 bcm

Prospective annual production – 15 bcm p.a

Current gas production is less than 0.2 bcm p.a. or nearly 1% from

potential output

Gas reserves of the Netets autonomous district are underdeveloped

due to remoteness from the existing pipeline network

504 (MTOE) 1400 (MTOE)

99%

13,8 (MTOE)

1%

0,18 (MTOE)

Source: Nenets Autonomous District Administration

Nenets Autonomus District

Market overview

Regional market overview Nenets Autonomus District

Reserves: oil and gas Production: oil and gas

Source: Nenets Autonomous District Administration

64% 36%

3

LNG technology is the most economically justified method

to develop gas potential of the region

Page 4: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Project overview

Project

Pechora LNG Yamal LNG

Sakhalin-2

Vladivostok LNG

Shtockman LNG

Pechora LNG Project in terms of Russian LNG market

Pechora LNG Project is based on reserves of Kumzhinskoye and

Korovinskoye gas-condensate fields in Nenets Autonomous District,

licensed to ALLTECH Group in the course of open bids held in

December 2007 and June 2009, respectively

Kumzhinskoye field was licensed at a decision of NAO Administration,

considering environmental issues related to consequences of gas

leakage accident happened in 1980

In line with license obligations, ALLTECH Group has performed

profound work to liquidate consequences of the accident and has

developed the program of environmental monitoring

Project Feasibility Studies (FS) have been completed, i.a.: field

development plan, gas treatment and pipeline transport, several

LNG plant options, shipping and LNG marketing

Kumzhinskoye field reserves have increased by 20 Bcm of gas

based on completed 3D seismic

Appraisal well on Kumzhinskoye field was drilled: gas flow rate was

proven at 1.1 mcm/day

Public Consultations on the Project were held in Naryan-Mar with

Declaration of Intentions presented to the public and local

administration

Additional preinvestment study was completed by Gazprom’s

subsidiary JSC «Giprospetsgas»

Positive expert opinion on preinvestment study was issued by

«Gasprom VNIIGAS»

Project status Project development history

4

Integrated production chain: gas production → gas treatment and

transportation → LNG production

Relative simplicity of implementation :

• proven resource base

• production and transportation from onshore fields

• light ice conditions in the region

Project key advantages

Page 5: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Project concept

Project

Existing Project resource base: Kumzhinskoye and

Korovinskoye fields, Nenets autonomous district

Perspective resource base: Vasilkovskoye, Vaneivisskoye,

Layavozhskoye fields, Nenets autonomous district

Gas treatment at GTP (village Krasnoye) and transportation to

LNG plant, Barents sea shore

LNG production: 2.6 - 8.0 mtpa

5

Page 6: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Resource base

Project

Kumzhinskoye field

Field discovered in 1968

On state balance since 1980

Wells drilled : 29

Total acreage : 225 km2

2D seismic completed on

262 line kilometers

License holder : CH Invest

License received in 2007

Korovinskoye field

Field discovered in 1975

On state balance since 1985

Wells drilled : 26

Total acreage :134 km2

2D seismic completed on

626 line kilometers

License holder : EvroSeverNeft

License received in 2009

Existing resource base Perspective resource base

Licensed resource base

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Field License status Cate-

gory

Gas,

Bcm

Conden-

sate,

mln.t

Oil,

mln.t

Vasilkovskoye Pechoranefte-

gazprom

С1

С2 78.4

8.5

3.0

0.3

-

-

Vaneivisskoye Open acreage С1

С2 85.2

-

3.9

-

5.7

0.9

Layavozhskoye Open acreage С1

C2 138.0

2.2

7.0

0.1

8.6

1.2

TOTAL

reserves C1+C2 312.3 15.7 39.9

Field License status Cate-

gory

Gas,

Bcm

Conden-

sate,

mln.t

Oil,

mln.t

Kumzhinskoye Alltech Group С1

С2 105.6

18.4

3.499

0.5

-

-

Korovinskoye Alltech Group С1

С2 40.9

0.2

0.9

0.1

-

-

TOTAL

reserves C1+C2 165.1 4.95 -

Page 7: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Gas and LNG production options (JSC «Giprospetsgas»)

Project

Gas production 7.0 Bcm. LNG production 4.0 mtpa Gas production 4.2 Bcm. LNG production 2.6 mtpa

Gas production 7.0 Bcm. LNG production 4.0 mtpa

(incl. processing of gas Vasilkovskoye field) Gas production 13.4 Bcm. LNG production 8.0 mtpa

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Gas: Vaneyvisskoye LNG

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Gas: Vasilkovskoye Gas: Korovinskoye

Gas: Kumzhinskoye LNG

Page 8: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Developing Nenets region gas potential (JSC «Giprospetsgas»)

Project

8

VASILKOVSKOYE

Pechoraneftegazprom

VANEIVISSKOYE

Open acreage

LAYAVOZHSKOYE

Open acreage

KUMZHINSKOYE

CH Invest

KOROVINSKOYE

EuroNorthOil

Ø 720, L 21 km

Ø 1020, L 300 km

GTP

Naryan - Mar

Page 9: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

LNG plant

Advantages :

shipyard-based construction

Possibility of relocation

Does not require jetty infrastructures

Disadvantages

High LNG storage vaporization at sea swells

Substantial ice management requirements

LNG offloading limitations in open sea conditions

Advantages

Proven design

Conventional technology packet

Disadvantages

Requires port infrastructures

Longer construction schedule

Higher CAPEX combining port infrastructures

Advantages

High ice loads

Structural stability during offloading in the open sea

Does not require jetty infrastructures Disadvantages

High weights characteristics and construction cost

Sea bottom installation requires supplementary investigations

Advantages

High ice loads

Structural stability during offloading in the open sea Low LNG storage construction cost

Disadvantages

Installation works at install point required

Sea bottom installation requires supplementary investigations

Onshore LNG plant (Technip/Air Products) Floating LNG – FLSO (Technip/DSME)

Floating LNG case – GBS (TGE Gas Engineering) Floating LNG case – GBS (Aker Solutions)

Project

Dimensions (hectares) - 210

Capacity (mtpa) - 2.6

LNG storage (m3) -180,000

Technology packet- APCI C3MR

Dimensions (L x W x H) (m) - 320 x 65 x 32

Capacity (mtpa) - 2.6

LNG storage (m3) - 235,000

Technology packet - APCI DMR

Dimensions (L x W x H) (m) - 330 x 75 x 40

Capacity (mtpa) - 2.6

LNG storage (m3) - 235,000

Technology packet - APCI DMR

Dimensions(øx H) (m) - 150 х 65

Capacity (mtpa) - 2.6

LNG storage (m3) - 250,000

Technology packet - APCI DMR

9

Page 10: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

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2.6 mtpa 4.0 mtpa (K+K)

4.0 mtpa (К+К+V)

USD/mmbtu

Liquefaction

Production, transportation, treatment

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8.0 mtpa

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Liquefaction

Production, transportation, treatment

**

* Gas cost level at which NPV of upstream & midstream stages equals zero, taking discount rate equal to 10%

** LNG cost level at which NPV of gas liquefaction stage equals zero, taking discount rate equal to 10%

Onshore LNG Plant: CAPEX Offshore LNG Plant: CAPEX

Offshore LNG Plant: Gas unit costs Onshore LNG Plant : Gas unit costs

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CAPEX and Per Unit Costs (JSC «Giprospetsgas»)

Financial parameters

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Production

**

*

Page 11: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

IRR results (JSC «Giprospetsgas»)

Financial parameters

IRR comparison of Project options

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10%

15%

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35%

40%

Poten&Partners forecast

RF EDM forecast (negative)

RF EDM forecast (basic)

RF EDM forecast (optimistic)

Poten&Partners forecast (+risks)

Onshore: 2.6

FLSO: 2.6

GBS: 2.6

Onshore (К+К): 4.0

FLSO (К+К): 4.0

GBS (К+К): 4.0

Onshore (К+К+В): 4.0

FLSO (К+К+V): 4.0

GBS (К+К+V): 4.0

Onshore 8.0

Ряд11 IRR=15%

Project options ↓

Page 12: PECHORA LNG - rustrade.org.ukrustrade.org.uk/.../4_Pechora-LNG_10-October.pdf · Gas reserves Oil reserves Gas production Oil production The ... Pechora LNG Yamal LNG Sakhalin-2

Feasibility study results and next steps

Project development

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• Pechora LNG is a technically feasible project

• Financial and economic results are attractive

• Risk analysis is performed. Risk factors are within the acceptable limits

• Market niche for the 2018-20 period was identified

• Next steps:

• Freezing Project’s resource base

• Negotiating the terms of cooperation with Russian gas players

• Formation of partnership with foreign partners