LNG IMPACT ON LITHUANIAN NATURAL GAS MARKET May 29, 2015 DOMINYKAS TUČKUS
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LNG IMPACT ON LITHUANIAN NATURAL GAS MARKET May 29, 2015
DOMINYKAS TUČKUS
2
CONTENTS
I. LITGAS activities
II. Trends in Lithuania
III. LNG market situation and outlook
NATURAL GAS SUPPLY AND TRADING
3
LITGAS: activities
LNG TERMINAL INFRASTRUCTURE
4
LITGAS: activities
Designated supplier for Klaipeda LNG terminal ensuring baseload supplies to energy producers
Natural gas trading, small
scale LNG supplies and bunkering
21% of natural gas market in Lithuania in 2015
5
II TRENDS IN LITHUANIA
6
Regional price comparison
In the 1h of 2014 Russian natural gas delivered to
Lithuania was on average
30% more expensive than
delivered to Germany
Source: Quarterly Report on European Gas Markets, 2014 Q4 European Commission, Directorate-General for Energy, Market Observatory for Energy
Germany Lithuania
35.2
25.83
Natural gas prices (€/MWh) in 1H 2014
7
Price trend in Lithuania
150
200
250
300
350
400
450
Jan
-12
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
No
v-1
2
De
c-1
2
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
De
c-1
3
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
De
c-1
4
EUR
/10
00
m3
Lithuanian average weighted natural gas import price
In May 2014:
LITGAS signs terms sheet with Statoil
AB Lietuvos Dujos negotiates a ~20% discount from Gazprom
Source: National Commission for Energy Control and Prices (Lithuania)
8
Price trend in Lithuania
150
200
250
300
350
400
450
Jan
-12
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
No
v-1
2
De
c-1
2
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
De
c-1
3
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
De
c-1
4
EUR
/10
00
m3
Lithuanian average weighted natural gas import price
In May 2014:
LITGAS signs terms sheet with Statoil
AB Lietuvos Dujos negotiates a ~20% discount from Gazprom
Source: National Commission for Energy Control and Prices (Lithuania), GET Baltic natural gas exchange
LNG import price for 2015 for energy producers – 12% lower than average natural gas import price in 2014Q1
Average wholesale price on NG exchange in 2015Q1 –
24.41 €/MWh
9
Natural gas consumption
Sources: Eurostat, National Commission for Energy Control and Prices (Lithuania), Central Statistical Bureau of Latvia, Estonian Ministry of Economic Affairs and Communications
TWh
-20%
10
New opportunities
New gas interconnectors will increase market reach
Bunkering – fuelling LNG capable ships, ferries in the sea
Shipping to small LNG terminals onshore the Baltic Sea
LNG regasification markets
Baltic-connector
GIPL
LNG marine + small scale markets
Markets accessible starting the 1st of January, 2015
Markets accessible after regional interconnections are finished
Markets accessible through reloading terminals
LNG terminals (5.000-30.000m3) in development
2.6
1.3
0.6 0.5 - 1.5
+3.7
+15.4
11
Facing challenges
Decreasing demand
Non-liberalized natural gas market in Latvia
Different measurement systems in the Baltic states
TPA for transit/storage has not been fully implemented in Latvia –significant progress achieved in the last 2 years
12
III LNG MARKET SITUATION AND OUTLOOK
13
LNG market: flows and volumes
LNG trade flows
89,20
37,62 18,98
34,28
32,45
20,98
4,10 1,56
LNG imports, BCM
Japan
S. korea
China
Rest of Asia
Europe
S. America
Middle East
24,83
23,60 17,38 13,09
19,14
12,72
10,58
7,73
33,70
LNG exports, BCM
Qatar
Malaysia
Australia
Indonesia
Trinidad
Nigeria
Algeria
30 importing countries 19 exporting countries 376 BCM total liquefaction
capacity 947 BCM total regasification
capacity 421 LNG carriers
Šaltinis: GIIGNL
14
LNG market: perspectives
LNG supply LNG demand
Šaltinis: BP World Energy Outlook 2030
BCM BCM
Other
Africa
Australia
U.S.
Russia
Qatar
Other South and Central America Europe
Asia-Pacific
15
LNG market: prices
NG price EUR/MWh
28,42 28,40
26,17 26,45 26,06 26,38
29,29
31,11
25,73
18,70
31,10 27,22
12,12 11,08
7,93 6,19
0
20
40
60
80
100
120
140
0
10
20
30
40
50
60
NBP
JKM
S. America
Spain
HH
Moldova
Brent
Ukraine
Belarus
Russia
Brent price USD/barrel
16
Natural gas trading trends
Natural gas traded on European hubs increased by 18% in 2014
29% of the world’s LNG traded on a spot or short-term basis (+7% in 2014)
Source: Quarterly Report on European Gas Markets 2014 Q4 (EC DG Energy), The LNG Industry in 2014 (GIIGNL)
0%
5%
10%
15%
20%
25%
30%
35%
2009 2010 2011 2012 2013 2014
Share of spot/short-term contracts
17
LNG market: import terminals in Europe
0%
10%
20%
30%
40%
50%
60%
70%
80%
20
12 1 2 3 4 5 6 7 8 9
10
11
12
20
13 1 2 3 4 5 6 7 8 9
10
11
12
20
14 1 2 3 4 5 6 7 8 9
10
11
12
20
15 1 2
inventory/terminals capacity Regas capacity utilization
18
Natural gas supply alternatives
Term
Volume
Indexation
Credit support
Take or Pay
Price level
Political uncertainty
Typical pipeline gas supply contract in CEE
> 0.5 BCM/year
10-20 years
Oil products/Brent
Flexible/none
80% annual
6-7 $/MMBtu
High
Typical US LNG supply structure
5 cargoes/year
Min. 20 years
HH/fixed
Sovereign guarantees
100%
7-9 $/MMBtu
Low
LNG spot market
-
-
NBP/Brent/fixed/HH
LC/PCG
None
6-9 $/MMBtu
Medium
19
Conclusions
Baltic states no longer isolated from the global gas markets
In Lithuania LNG has put a cap on pipeline gas prices
LNG supply outlook is positive: increasing competition putting pressure on traditional natural gas suppliers
In Europe LNG has proved to be an efficient tool ensuring security of energy supplies and balancing the peaks in demand
Challenges:
Regulation still lagging behind
Decreasing consumption
THANK YOU!
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