regulatory perspectives in developing lng infrastructure
TRANSCRIPT
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Regulatory Perspectives in Regulatory Perspectives in Regulatory Perspectives in Regulatory Perspectives in
Developing LNG InfrastructureDeveloping LNG InfrastructureDeveloping LNG InfrastructureDeveloping LNG Infrastructure
Gülefşan DemirbaşGülefşan DemirbaşGülefşan DemirbaşGülefşan Demirbaş
EMRA/ICEREMRA/ICEREMRA/ICEREMRA/ICER, , , , TurkeyTurkeyTurkeyTurkey
16th ERRA 16th ERRA 16th ERRA 16th ERRA EnergyEnergyEnergyEnergy InvestmentInvestmentInvestmentInvestment and and and and RegulationRegulationRegulationRegulation ConferenceConferenceConferenceConference
SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 2
BackgroundBackgroundBackgroundBackground
• ICER-IGU Joint Study
• to take a picture of different regulatory choices;
• to analyze different structures in related
investment regimes;
• to provide good regulatory practices
• A Case Study: Regulatory Perspectıves in
Developıng Turkish LNG Infrastructure
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 3
Global Gas DynamicsGlobal Gas DynamicsGlobal Gas DynamicsGlobal Gas Dynamics
Global Gas Trade by ExporterGlobal Gas Trade by ExporterGlobal Gas Trade by ExporterGlobal Gas Trade by ExporterGlobal Gas DemandGlobal Gas DemandGlobal Gas DemandGlobal Gas Demand
Source: IEA
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 4
LNG: LNG: LNG: LNG: GrowingGrowingGrowingGrowing SourceSourceSourceSource
Global Regasification CapacityGlobal Regasification CapacityGlobal Regasification CapacityGlobal Regasification Capacity
Source: IEA
FSRU FSRU FSRU FSRU CapacityCapacityCapacityCapacity
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 5
Turkish Gas Turkish Gas Turkish Gas Turkish Gas & & & & LNGLNGLNGLNG MarketMarketMarketMarket
2016 Outlook2016 Outlook2016 Outlook2016 Outlook
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 6
Legal FrameworkLegal FrameworkLegal FrameworkLegal Framework
• Free market entrance thru licensing.
• Legal & account unbundling.
• Regulated TPA regime.
• Semi-liberalization of gas imports.
• Gas release program.
• Static precautions in terms of
limiting market share.
• Non-discriminatory conduct
between domestic and foreign
investors.
LNG
Terminals
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 7
Developing Regulatory Framework for LNGDeveloping Regulatory Framework for LNGDeveloping Regulatory Framework for LNGDeveloping Regulatory Framework for LNG
• Liberalizing the gas import regime.
• Introduction of spot LNG into legal texts.
• Attempts for legally defining LNG as a distinct market activity.
• Contract releases.
• Adoption of Basic Usage Principles and Procedures.
• Introduction of FSRUs.
• Developing rules for Organized Natural Gas Wholesale Market.
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 8
Basic Usage Principles and ProceduresBasic Usage Principles and ProceduresBasic Usage Principles and ProceduresBasic Usage Principles and Procedures
• Regulated TPA
• Pro-rata capacity allocations on a yearly basis.
• Possibility for inventory transfers.
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 9
Growing Growing Growing Growing GasGasGasGas MarketMarketMarketMarket vsvsvsvs LNGLNGLNGLNG
14,614,614,614,616,116,116,116,1 17,317,317,317,3
20,820,820,820,8 21,821,821,821,8
26,626,626,626,6 30,230,230,230,2
35,835,835,835,837,437,437,437,4
35,935,935,935,938383838
43,943,943,943,945,945,945,945,9 45,345,345,345,3
49,349,349,349,3 48,448,448,448,446,446,446,446,4
32,00%32,00%32,00%32,00% 32,50%32,50%32,50%32,50%
30,40%30,40%30,40%30,40%
23,60%23,60%23,60%23,60%
19,30%19,30%19,30%19,30%18,10%18,10%18,10%18,10% 17,60%17,60%17,60%17,60%
16,10%16,10%16,10%16,10%14,70%14,70%14,70%14,70%
17,20%17,20%17,20%17,20%21,50%21,50%21,50%21,50%
14,80%14,80%14,80%14,80%
17,10%17,10%17,10%17,10%
13,40%13,40%13,40%13,40%14,80%14,80%14,80%14,80%
15,80%15,80%15,80%15,80% 16,50%16,50%16,50%16,50%
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total Imports (bcm) LNG Share (%)
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 10
Turkey’sTurkey’sTurkey’sTurkey’s FSRU FSRU FSRU FSRU PracticePracticePracticePractice
ProsProsProsPros ConsConsConsCons
LesserLesserLesserLesser environmentalenvironmentalenvironmentalenvironmental impactimpactimpactimpact ChallengesChallengesChallengesChallenges ofofofof havinghavinghavinghaving allallallall thethethethe facilitiesfacilitiesfacilitiesfacilities includingincludingincludingincluding FMS’sFMS’sFMS’sFMS’s onononon----
boardboardboardboard
SignificantlySignificantlySignificantlySignificantly shortershortershortershorter timetimetimetime neededneededneededneeded totototo startstartstartstart operationoperationoperationoperation ((((1111 totototo
1111,,,,5555 yearsyearsyearsyears comparedcomparedcomparedcompared totototo 4444----5555 yearsyearsyearsyears forforforfor onshoreonshoreonshoreonshore LNGLNGLNGLNG
terminalterminalterminalterminal))))
OperationalOperationalOperationalOperational difficulties,difficulties,difficulties,difficulties, suchsuchsuchsuch asasasas unpredictableunpredictableunpredictableunpredictable seaseaseasea
movementsmovementsmovementsmovements duringduringduringduring offloadingoffloadingoffloadingoffloading
SufferingSufferingSufferingSuffering lesslesslessless forforforfor NIMBYNIMBYNIMBYNIMBY (not(not(not(not inininin mymymymy backbackbackback yard)yard)yard)yard) syndromessyndromessyndromessyndromes DifferentDifferentDifferentDifferent structurestructurestructurestructure ofofofof operationaloperationaloperationaloperational costscostscostscosts
AbilityAbilityAbilityAbility totototo bebebebe relocatedrelocatedrelocatedrelocated accordingaccordingaccordingaccording totototo thethethethe demanddemanddemanddemand
LessLessLessLess startstartstartstart----upupupup costcostcostcost
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 11
Tariffs Applicable to FSRUs in TurkeyTariffs Applicable to FSRUs in TurkeyTariffs Applicable to FSRUs in TurkeyTariffs Applicable to FSRUs in Turkey
• Tariff modelTariff modelTariff modelTariff model: Revenue cap
• Return based on FSRU Rental Expenses and LineReturn based on FSRU Rental Expenses and LineReturn based on FSRU Rental Expenses and LineReturn based on FSRU Rental Expenses and Line----PackPackPackPack: Charter expenditures
are included in the asset base, but not depreciated
• PricingPricingPricingPricing: Methodology may consider costs incurred by the services &cash-flow
• Tariff periodTariff periodTariff periodTariff period: 3 to 10 years
• Regulatory DepreciationRegulatory DepreciationRegulatory DepreciationRegulatory Depreciation: 5 to 22 years
• DiscountsDiscountsDiscountsDiscounts: No
• WACCWACCWACCWACC: 10%
• Tariff revisionsTariff revisionsTariff revisionsTariff revisions: Deviations exceeding 10% of asset base, non-controllable
OPEX
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SeptemberSeptemberSeptemberSeptember 25252525----26262626, 201, 201, 201, 2017 7 7 7 •••• AstanaAstanaAstanaAstana, , , , KazakhstanKazakhstanKazakhstanKazakhstan 12
Prospects for Improving Turkish LNG MarketProspects for Improving Turkish LNG MarketProspects for Improving Turkish LNG MarketProspects for Improving Turkish LNG Market
• Standardization & simplification of the Usage
Procedures and Principles of the LNG terminals & FSRUs
• Improvement & standardization of web-based capacity
booking & nomination platforms of the LNG terminals
• Adoption of TPA exemptions and open season practices
• Building of LNG liquefaction facilities & increasing
storage capacity
• Further developing competitive market
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