heat value lng
TRANSCRIPT
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OCTOBER 2010
LNG
WHAT IS LNG Natural Gas cooled down toapproximately 161C
The natural gas is condensedinto a liquid
Mass is then reduced 600
times
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LNG
THE LNG VALUE CHAIN
Liquefaction
~1 USD/MMBtu
Shipping
~0.4 USD/MMBtu
Regasification
~0.4 USD/MMBtu
1 ton LNG = 52 MMBtu = 15.3 MWh 1.300 m3 of natural gas *)
*) Depending of heat value
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WORLD LNG SUPPLIERS AND MARKETS
Major suppliers
01 Algeria02 Nigeria03 Qatar, Oman & UAE04 Indonesia & Malaysia05 Australia06 Trinidad & Tobago07 Egypt
01 0306
05
04
AC
D
Major markets
A Japan & KoreaB North AmericaC MediterraneanD North West EuropeE IndiaF Taiwan
EF
07
?
0236
55
18
12
Japan & Korea
04
03
05B
Source: BP statistical Review 2010
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WORLD LNG SUPPLIERS AND MARKETS
Major suppliers
01 Algeria02 Nigeria03 Qatar, Oman & UAE04 Indonesia & Malaysia05 Australia06 Trinidad & Tobago07 Egypt
01 0306
05
04
B AC
D
Major markets
A Japan & KoreaB North AmericaC MediterraneanD North West EuropeE IndiaF Taiwan
EF
07
?
02
Source: BP statistical Review 2010
-
36
9
12
9
-3
Middle East
A
D
C
E
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LNG
LNG PRICES IS USUALLY LINKED TO OIL
LNG doesnt have a commonprice denominator as known
from oil (i.e. Brent or WTI)
Instead LNG is priced against
the destined market
LNG for Japan usually links toJCC crude notation
In European markets it is Brentor NBP
Henry Hub is widely used in USmarket
0
100
200
300
400
500
600
700
800
sep-07
nov-07
jan-08
mar-08
maj-08
jul-08
sep-08
nov-08
jan-09
mar-09
maj-09
jul-09
sep-09
nov-09
jan-10
mar-10
USD/
1000 m3
EU L NG imp or t p ric e span Av e rage Euro pean LNG pr ic e
German import pr ice
Source: IEA, BAFA, Japanese Ministry of Finance
Brent
Gas price Crude oil parity
S-curve
Illustrative
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LNG
CASE: JAPANESE LNG PRICES
0
150
300
450
600
750
0
5
10
15
20
25
2008-01-01 2008-07-01 2009-01-01 2009-07-01 2010-01-01 2010-07-01
EUR
/'000m3
USD
/MMBtu
Parity Indonisia Qatar Nigeria Australia Henry Hub NBP
Source: Thompson Reuters, Japanese Ministry of Finance
1-6 month
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LNG
WHY LNG IN THEBALTIC
Security of Supply
Diversity of Supply
Flexibility
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LNG
THE PRESENT SITUATION FOR SECURITY OFSUPPLY IN EUROPE
low
High
Source: Ramboll Security of Supply index (RAMSOS)
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LNG
RECOMMENDATIONS FROM BEMIP
Substantial investment ininfrastructure
Amber PolLit
Balticconnector
At least one LNG terminal
Strengthening of existinginfrastructure between Balticstates
Promote reverse flow in Yamalpipeline
LNG terminals planned or under construction/
Balticconnector
Amber PolLit
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LNG
HOW IS IT DONE Thorough planning
Patience
Brave decisions
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LNG
BUILDING A LNG TERMINAL TAKES TIME
Months600
18-24 months
36-42 months
4-6 months
Feasibility/FEEDEIA
Permetting
Construction
Commissioning
Project award
First gas
Suppliernegotiations
Business processesIT systems
Financial and legalstructure
Note: Assuming a larger scale base load terminal
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LNG
THERE ARE ECONOMIES OF SCALE
0
100
200
300
400
500
0 2 4 6 8 10 12
Million
Euro
perBCM
capacity
Total capacity of terminal (BCM)
Existing terminals Planned terminals
33
162
14
14
1
20 Equipment
Materials
Prefabrication
Construction
Design & PM
Insurance & certification
Contingency
CAPEX split on work
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LNG
WHAT IS YOUR DESIRED RISK APPETITE
Commercial issues
Number of suppliers FOB vs. CIF Underlying indexation Rely on spot cargoes
Planning/permitting issues
Third party access Regulatory setup (ie what level of
tariffs can you expect)
Technical/operational issues
EPC or several tenders Operational organisation Gas quality
Financial/structuring issues
Capital structure Project financing Strategic partners Company structure
Special purpose financing (EBRD, EIBetc.)
Non-Exhaustive!
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