widodo w. purwanto , *hanan nugroho departemen teknik kimia universitas indonesia *bappenas
DESCRIPTION
Natural Gas Price & Tariff Lecture- 3. Widodo W. Purwanto , *Hanan Nugroho Departemen Teknik Kimia Universitas Indonesia *Bappenas. There is no “World Prices” for gas … yet. Oil and gas are DIFFERENT commodities. Market maturity Regional differences Different outlets Risks. Mature - PowerPoint PPT PresentationTRANSCRIPT
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Widodo W. Purwanto, *Hanan Nugroho
Departemen Teknik KimiaUniversitas Indonesia
*Bappenas
Natural Gas Price & Tariff
Lecture-3
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There is no “World Prices” for gas … yet
Market maturity
Regional differences
Different outlets
Risks
In development
Regional
No captive market
Market risk
Mature
International
Captive markets
Exploration risks
Oil and gas are DIFFERENT commodities
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Price theory
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Gas pricing: Basic principles
Fixed Prices
Cost-Plus
Pt = Po[a(Gt/Go) + b(Ft/Fo)]
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Price Components
The basic price, which splits the risks between the two parties: sellers and buyers
Indexation provision, which assures gas competitiveness and helps to integrate the changes occurring in the energy market, without having to renegotiate the contract
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Example: Ruhrgas’ NWCE Additive
Formula P = Po + 0.6 x f1 x k1 (KEL–KELo) + 0.4 x f2 x k2 (HSL–HSLo)
Where
Po = base price for German pfennings per kWh (pf/kWh)
KEL= price of gasoil in Deutsche Mark per metre tonne (DM/Tonne), net of all taxes and duties in German inland market
HSL = Price of Heavy fuel oil with maximum 1% sulphur in DM/Tonne net of all taxes and duties in German inland market
f = “delivery point” adjustment factors,
k = energy conversion factors,
Methodology: calculation on price averages over a period of 3 to 12 months
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Pricing formulae: Other parameters
Long term pricing: partial indexation to coal used in some power generators’ purchase contracts (Italy’s Enel)Spot and short term sales (one day to one year): Fixed prices for gas, determine by market conditions at the moment the deal is signedPrice Review Clause: provided for renegotiating the price formulae if market conditions are substantially modified (for instance, the NWCE formulae was transformed into a modified “S-Curve” formula).
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Recent trends in Gas Pricing Formulae in Europe: Spot Price Indexing
IPE prices have started to be used as the basis for price indexing in mid-term pipeline contracts.Statoil sold 5 Bcm/year of gas to British Gas Trading (Centrica), over a 10 year period (2005-2015), indexed to the spot gas price at the NBP.Gasunie Trading & Supply sold 8 Bcm/year of gas to British Gas Trading (Centrica) over a 10-year period (2005-2015) indexed to the spot gas price at NBP. This contract is tailored to match Centrica’s high seasonal demand profile.
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Cost component of pipeline gas
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Price of crude oil vs. gas
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Oil/Gas Price ratio
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Comparison of coal/crude oil prices
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Perbandingan nilai gas bumi
0
5
10
15
20
25
30
LNG - Badak Pipeline - Java Methanol GTL (FTDiesel)
DME
US
$ / M
MB
tu Distribution
Processing
Netback
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LNG Prices to Japan
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LNG Prices to Japan and JCC
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LNG Prices to Japan, Korea and Taiwan
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LNG Pricing by Region
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LNG Pricing Formulae in Asia (1)1988 – 2004Prices linked 85% to crude oil
10-15% premium over crude at around $18/bbl
Lower premium declines at higher oil prices and no premium above $28-$30/bbl
“S” shaped curve in some contracts
2004+New indices and price mechanisms to reflect changing markets?
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LNG Pricing Formulae in Asia (2)
Reference Oil Price: JCC Japanese Custom Cleared average price1988 – 2004Price applies over an agreed range ($11 to $30/bbl), outside that range there is an agreement to “meet and discuss”Such a pricing basis initially developed with Japanese buyers but has been adopted by S. Korea and TaiwanIn Japan the basic formula has been modified by adopting an “S” shaped curveNo “S” curves in S. Korea and Taiwan contracts
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LNG Pricing Formulae in Asia (3)
Most contracts for LNG sold on an ex-ship basis use the following pricing formula:
P(LNG) = A x P (Crude Oil) + Bwhere
P(LNG) = price of LNG in cents$/MMBtu
P (Crude Oil) =price of crude oil in $/bbl
B = a constant in cents/MMBtu
In many contracts:
A = 14.85
B = 70 to 90 cents
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Basic LNG Pricing Formulae in Asia
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Asian “S” Curve Price Formula
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LNG Pricing Formulae in AsiaLinkage to crude oil is about 85% In most contracts the average of Japanese Custom Cleared (JCC) crude prices are used, but Indonesia uses the average price of Indonesian crude exports Inclusion of constant results in premium over crude oil parity of about 10-15% at $18/bblPremium erodes as oil price increase and disappears at around $28-30/bbl Most price negotiations focus on the constantThe 14.85 factor is used in many contract is not exclusive (especially in FOB contracts)
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Level of price formula varies along fluctuating oil price
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Tipikal formula harga LNG
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Harga Gas Internasional dan Domestik
0
2
4
6
8
10
12
14
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
US$/ MMBtu
NG US NG Uni Eropa
LNG Jepang NG PGN
NG PUSRI NG PIM
NG PKC NG PKG
NG PKT
• Harga gas PGN berkisar 1/3 sampai 1/2 dari harga gas internasional• Harga gas domestik untuk pupuk berkisar 1/6 sampai 1/4 dari harga gas
internasional
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Perbandingan Harga Gas Bumi dengan
Harga Minyak Bumi
0
10
20
30
40
50
60
70
80
90
100
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
US$/barel of Crude Oil
0
2
4
6
8
10
12
14
16
18
20
US$/ MMBtu of Natural Gas
Crude Oil
NG US
NG Uni Eropa
LNG Jepang
NG PGN
Pola harga gas di luar negeri mengikuti pola harga minyak bumi, tetapi tidak demikian halnya dengan pola harga gas domestik.
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Rasio harga minyak bumi terhadap harga gas bumi
0
2
4
6
8
10
12
14
16
18
20
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
NG US
NG Uni Eropa
LNG Jepang
NG PGN
Rata-rata rasio harga minyak bumi terhadap gas di: - US sebesar 8,7 - Uni Eropa sebesar 7,6
- Jepang sebesar 6,2 - PGN berkisar 8-18
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Korelasi Harga Gas Internasional dengan
Harga Minyak Bumi
0
2
4
6
8
10
12
14
0 20 40 60 80 100 120
Harga Minyak Bumi (US$/Barrel)
Harga Gas (US$/MMBtu)
NG US Gas Uni Eropa LNG Jepang
Berdasarkan regresi linear tersebut diperoleh persamaan untuk gas bumi di:
- Uni Eropa (3.25)- US (3.26)
- Jepang (3.27)
2474,01229,0 PcoPg
7554,00964,0 PcoPg
7269,10959,0 PcoPg
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Different Tariffication Methods for Gas Transportation
Tariffication according to the «distance»: booking capacity along each section of the «tariff route»Tariffication according to «pondered distance» (average distance)Tariffication «Entry-Exit»: booking capacity at entry and exit, without taking into account physical flows between these two pointsTariffication «post-stamp»: a unique tariff applied for injection and withdrawal on the overall territory
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