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LNG Import Terminals: Challenges and Opportunities

13th October 2016

Mangesh PatankarHead of Business Development (Asia Pacific), Galway Group

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Galway Group has been actively involved in energy projects across the globe

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Small-Scale LNG Value chain

Project Development Support, Techno-Commercial Advisory and Capital Raising Services

Opportunity Definition Concept Framing Deal Development Financing Asset Operations

Canada

USA

PeruMozambique

Indonesia

Uruguay

Hawaii

Panama Colombia

Puerto Rico

US Virgin Islands

Mauritius

South Africa

Bahrain

East Coast India

Vietnam

PhilippinesCuracao

El Salvador

Chile

Netherlands

Cyprus

NigeriaSingapore

Abu Dhabi

Japan

Korea

Thailand

Pakistan

MexicoJamaica

Myanmar

Australia and US liquefaction projects are driving a supply glut that will last into the early years of next decade

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Small-Scale LNG Value chain

0

50

100

150

200

250

300

350

400

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

MT

PA

Existing Under Construction LNG Demand

Outages will reduce the forecasted oversupply

Supply from pre-FID projects required only beginning 2023

The ensuing supply glut will increase penetration of gas in China & India, as well as firm the role of LNG in emerging markets

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Small-Scale LNG Value chain

South-East Asia

Central Americas and Carribean islands

India

China

Middle East

Emerging markets defined as countries that commenced LNG imports post 2010 or are likely to commission LNG imports in future

Emerging LNG Markets (Large Scale & Small Scale)

Africa

PakistanBangladesh

Regas terminals can be classified into two types: Land based and Floating

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Small-Scale LNG Value chain

Onshore Floating

• Industry “Standard”

• Cost: $0.5 - $1.5+ Billion

• 3-4 years construction

• Most suitable for larger, base

load service (economics)

• Require deep water port

• Require sizeable land area

• Rapidly growing option

• Cost: $125-$250+ MM

(FSRU) plus $50 - $200+

MM (infrastructure)

• Construction: 12-30 months

• Unit costs can be higher

depending on throughput

• Require deep water port

• Flexibility to redeploy

Marine facilitiesTanks

Vaporizers &

Utilities

Berth & Mooring

System

FSRU or

FSU + Regas or

FRU + Storage

Tanks

Vaporizers &

Utilities

Onshore or Floating

• Emerging option

• Cost: $50+ million

• Construction: 2+ years

• Onshore or floating (barges)

• Unit costs highly dependent

on throughput

• May not require deep water

port if serviced by small

scale ships/barges

Standard LNG Terminals Small Scale LNG

Understanding the terminal characteristics is key to selecting the type of regas suitable for the market

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Key Characteristics

Land based vs FSRU

Project Lead TimeSignificantly shorter for FSRU, in countries where Government

permitting process is simple

Capital CostLower unit capex cost for FSRU compared to onshore terminal, but

difficult to achieve economies of scale as demand grows

Opex Higher for FSRU than onshore regas terminals

Weather ConditionsHarsh weather conditions will impact the annual terminal availability

factor for FSRU

Returns Suboptimal utilisation will affect returns for FSRU significantly

Shipping CostShipping costs likely to be higher for FSRU, given limited storage

capacity

Site & Market specific feasibility studies required to decide the type of regas, the configuration and the technology

Viable LNG Import Terminal Solution is an Important Component of Establishing Credibility with Suppliers

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Small-Scale LNG Value chain Most LNG sourcing strategies aim to establish a competitive

environment amongst potential suppliers to obtain:

Competitive price,

Fair terms and conditions and

Security of supply

The buyer would want to involve multiple qualified potential suppliers in a process (Request for Proposal or parallel negotiations) to create that competitive environment

To attract multiple qualified potential suppliers, buyer must establish its credibility with potential suppliers

Credibility and reliability as a buyer

Creditworthiness, Offtake reliability, etc.

Credibility and reliability of existing gas and LNG infrastructure

Credibility and technical viability of gas and LNG infrastructure development plans

Key Takeaways

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The ensuing LNG supply glut will support the development ofemerging importers, thereby increasing the opportunities forinvestment in regas terminals

New markets can be categorised into:

Large scale

Small Scale (< 1 MTPA)

The decision for land-based vs floating is market & locationspecific. Regas configuration & technology should be“acceptable” to as many potential suppliers as possible

Head Office: 3009 Post Oak Blvd., Suite 950, Houston, Texas 77056 Phone: +1 713 952 0186 Fax: +1 713 952 9861Regional Office: 8 Temasek Boulevard #22-04 Suntec Tower 3 Singapore 038988 Phone: +65 6222 7917 Fax: +65 6235 4415

www.galwaygroup.com

Thank You

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