Global LNG Market Overview London, 18 March 2014 Andrew Walker – VP Global LNG Methane Shirley Elisabeth LNG vessel
Nov 28, 2014
Global LNG Market Overview
London, 18 March 2014
Andrew Walker – VP Global LNG
Methane Shirley Elisabeth LNG vessel
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2
3
• Review of 2013
– Supply
– Markets
– Trade dynamics
– Prices
• Outlook for 2014
– Key influences
• And beyond ….
– When will the current market
tightness end?
Global LNG market update
LNG supply by year: 2005 to 2013
4
120
140
160
180
200
220
240
260
2005 2006 2007 2008 2009 2010 2011 2012 2013
mtp
a
Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Nig
eria
Eg
yp
t
No
rwa
y
Ind
on
esia
US
(K
en
ai)
UA
E
Ru
ssia
Alg
eria
Lib
ya
EG
Bru
ne
i
T&
T
An
gola
Peru
Om
an
Qa
tar
Au
str
alia
Ma
laysia
Ye
me
n
mt
Supply by country: 2013 YOY
5
Total = +1.1 mtpa
+7.9 mtpa -6.9 mtpa
Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
Markets: 2013 YOY
-5
0
5
Spain
UK
Fra
nce
US
A
Tu
rke
y
Italy
Ind
ia
Gre
ece
Be
lgiu
m
Ca
na
da
Ku
wa
it
Po
rtu
ga
l
Ch
ile
Ne
the
rla
nd
s
UA
E
Ta
iwa
n
Do
m R
ep
Me
xic
o E
P R
ico
Isra
el
Th
aila
nd
Ja
pa
n
Ind
on
esia
Sin
gap
ore
Arg
en
tin
a
Ma
laysia
Bra
zil
Me
xic
o W
Chin
a
Ko
rea
mt
6
Total = +1.1 mtpa
Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
+7.8 China/Korea
+5.5 Americas
+4.3 Other Asia
-16.9 mtpa
-4.1 N. Europe
-9.6 M. Europe
+18.0 mtpa
LNG trade balance: 2013 vs 2012
-15
-10
-5
0
5
10
15
Su
pply
Asia
/ M
.E.
La
tin
Am
.
US
/ C
an
N. E
uro
pe
M. E
uro
pe
mt
7
-$5.00
-$4.00
-$3.00
-$2.00
-$1.00
$0.00
$1.00
$2.00
Asia
n s
po
t ($
/mm
Btu
)
JC
C (
$/b
bl)
YOY prices
Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
Platts, Petroleum Association of Japan
Latin America = Argentina, Brazil, Chile, Mexico, Puerto Rico, Dominican Republic
M. Europe = France, Italy, Spain, Portugal, Greece, Turkey
European LNG imports: 2010 to 2013
0
2
4
6
8
10
12
Ja
n-1
0
Ja
n-1
1
Ja
n-1
2
Ja
n-1
3
bc
fd
Netherlands
UK
Belgium
Turkey
Spain
Portugal
Italy
Greece
France
8
3-month moving average
Main Europe -21.0
North Europe
-9.8
Spain
France
Italy
Turkey Portugal Greece
United Kingdom
Belgium
-35
-30
-25
-20
-15
-10
-5
0
5
mt
2013 vs. 2010
Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
Netherlands
LNG market has tightened
9
Source: 2008-2013: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
*Forecast – BG Group outlook 2013
LNG imports by region 2008-15 (mtpa)
0
50
100
150
200
250
300
2008 2009 2010 2011 2012 2013 2014 2015
Total supply
Asia Pacific
Europe
North America
Supply outpacing Asia demand growth Asia demand growth outpacing supply
Market loosening Market tightening
M. East
FORECAST*
S.America
0
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014 2015
$/m
mb
tu
Gas and LNG prices
10
Oil parity
NBP
HH
Asia long-
term proxy Asia spot
Global
recession
Asia
recovery
Fukushima
earthquake
Note: Asia long-term proxy = 14.85% JCC + 0.50
Oil parity = JCC = Japanese average crude price
Source: Platts, Heren, Petroleum Association of Japan and Bloomberg (as of Mar 6, 2014)
2013: Year in review
• Supply
– Effectively flat YoY – two new trains had limited impact
– Unplanned outages and declines weighed on supply
• Markets
– Growth & diversification: 10 new terminals & three new markets added
– Nuclear impacts in Japan and Korea
– Unexpected Latin American demand; Mexican tender and Brazil drought
• Trade dynamics
– Continued market tightness – Europe the balancing market
– Record Atlantic-to-Pacific basin trade flows
– European re-exports
– Asian 2013 average spot price up nearly $1.00/MMBtu YoY
11
Global LNG re-exports
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
Ja
n
Ma
r
Ma
y
Ju
l
Sep
Nov
Ja
n
Ma
r
Ma
y
Ju
l
Sep
Nov
Ja
n
Ma
r
Ma
y
Ju
l
Sep
Nov
Ja
n
Ma
r
Ma
y
Ju
l
Sep
Nov
Ja
n
Ma
r
Ma
y
Ju
l
Sep
Nov
Ja
n
Ma
r
Ma
y
Ju
l
Sep
Nov
2008 2009 2010 2011 2012 2013
bcfd
Belgium RE Brazil RE France RE Mexico RE Netherlands RE
Portugal RE South Korea RE Spain RE US RE
Re-exports (mtpa)
2013 4.4
2012 3.5
2011 2.3
2010 1.0
2009 0.2
2008 0.3
Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
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Outlook for 2014: key influences
• Supply
– Timing of Australasian ‘LNG’ wave: PNG and QCLNG start-ups
– Angola LNG ramp-up
– Overall industry performance: declines and unplanned outages
• Markets
– Start-up of Japanese nuclear capacity
– Chinese gas and LNG demand growth
– Latin America: tenders/continued drought
• Trade dynamics
– European LNG minimum – how low can Europe go?
– How much volume will Qatar send to the UK?
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Looking beyond 2014 …
• When will the current market tightness end?
• Supply factors
– Ramp-up of Australian supply
– Project FIDs for next material wave: US, Canada, Mozambique
(In 2013 10 new projects planned FID – one took it)
• Market factors
– Asia LNG growth (China, south-east Asia, Japan)
– New markets: FSRUs are reducing lead-time and cost of access
• Trade dynamics
– Australia arrests growing tightness – but new supply is required to reverse it
– LNG industry likely to be tight through the end of the decade
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Summary
• What did the market tell us in 2013?
– Underlying tightness
– Europe the balancing market
– Seasonal overlay: weather, storage, market sentiment & foresight
– Increasing resilience: surprises are the ‘new normal’
• When will the current tightness end?
– Dependent upon timing of new supply vs market growth
– New supply will take longer than many envisage
– LNG market will remain tighter, for longer than many assume
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