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LNG
What Will Be the Impact of Qatar’s SixMega-Trains on the Global LNG Market?What Will Be the Impact of Qatar’s Six
Mega-Trains on the Global LNG Market?
Andy Flower Independent Consultant
Andy Flower Independent Consultant
7th Doha Natural Gas Conference
and Exhibition
Doha, March 9th-12th 2009
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LNG
LNG in 2008LNG in 2008
• Global LNG trade fell marginally in 2008, thefirst fall since 1980 & 1981• The problem was on the supply side with only
5 of the 15 exporting countries increasingtheir exports
• The reasons for the lower than expectedoutcome include – Shortage of Gas Supply: e.g. Nigeria, Indonesia,
Oman, Egypt
– Force Majeure: e.g. Nigeria, Algeria – Technical Problems: e.g. Norway, Australia NWSTrain 5
– Delays in Start-up: e.g. Qatargas II Train 1,Indonesia (Tangguh), Sakhalin
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LNG
LNG Trade by Exporter 1964 – 2008LNG Trade by Exporter 1964 – 2008
0
40
80
120
160
200
1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
NorwayEquatorial GunieaEgyptOmanNigeriaTrinidadQatar AustraliaMalaysiaAbu Dhabi
IndonesiaBruneiLibyaUSA - AlaskaAlgeriain
mtp
a
7.4%pa
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LNG
Outlook for LNG Supply 2009 to 2012Outlook for LNG Supply 2009 to 2012
• 95.3mtpa of new production capacity now under construction scheduled to come on stream between 2009and 2012
Qatar 46.8mtpa
Indonesia 7.6mtpaRussia 9.6mtpa
Yemen 6.7mtpa
Malaysia 1.5mtpa
Peru 4.4mtpa
Australia 4.3mtpa
Angola 5.2mtpa
Algeria 9.2mtpa
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LNG
Global LNG Supply from Plants in Operation and
Under Construction in January 2009
Global LNG Supply from Plants in Operation and
Under Construction in January 2009
0
100
200
300
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
Pacific Basin Middle East Atlantic Basin
inm
tpa
Inmtpa
11.9%pa
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LNG
Firm and Flexible Markets for LNGFirm and Flexible Markets for LNG
• Firm – Markets which have to have the LNG supply and will pay the
price needed to secure cargoes
– Asia, southern Europe (Turkey, Spain, southern France,Portugal), Latin America, Caribbean, New England (USA)
• Flexible
– Markets with alternative pipeline gas supplies where price willdetermine whether LNG is imported
– USA (Gulf of Mexico, West Coast), UK, Belgium, Netherlands
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LNG Demand Outlook 2009-2012LNG Demand Outlook 2009-2012
• The increase in supply comes at a timewhen demand is weakening in most of the firm LNG markets
– Asian imports in 4Q08 down 5% comparedwith 4Q07 (and lower than 3Q08)
– Imports in firm European markets up by14% in 1H08 (compared with 1H07),
unchanged between 2H07 and 2H08 – Main increase in imports into firm markets
in the 2H08 has been in the new marketsin the Americas (Argentina and Mexico)
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Short-term Cargoes from the Atlantic Basin
Received by Asian Buyers in 2007 to
1Q2009
Short-term Cargoes from the Atlantic Basin
Received by Asian Buyers in 2007 to
1Q2009
0
1
2
3
4
5
1 Q 0 7
2 Q 0 7
3 Q 0 7
4 Q 0 7
1 Q 0 8
2 Q 0 8
3 Q 0 8
4 Q 0 8
1 Q 0 9
( e )
Korea Japan Taiwan India China Total Asia
Inmt
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LNG
LNG Demand in Firm Markets and Global Supply
2007-2012
LNG Demand in Firm Markets and Global Supply
2007-2012
0
100
200
300
2 0
0 7
2 0
0 8
2 0
0 9
2 0
1 0
2 0
1 1
2 0
1 2
Asia Europe Americas Supply
inm
tpa
Inmtpa
Available for
Flexible Markets
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LNG
Natural Gas, LNG and Crude Oil PricesNatural Gas, LNG and Crude Oil Prices
Jan 2008 to Dec 2010Jan 2008 to Dec 2010
Natural Gas, LNG and Crude Oil PricesNatural Gas, LNG and Crude Oil Prices
Jan 2008 to Dec 2010Jan 2008 to Dec 2010
0
5
10
15
20
25
J a n - 0 8
M a r - 0 8
M a y - 0
8
J u l - 0
8
S e p - 0 8
N o v - 0
8
J a n - 0 9
M a r - 0 9
M a y - 0
9
J u l - 0
9
S e p - 0 9
N o v - 0
9
J a n - 1 0
M a r - 1 0
M a y - 1
0
J u l - 1
0
S e p - 1 0
N o v - 1
0
US (Henry Hub) Spain Japan Brent UK-NBP
In$/MMB
tu
Actual Outlook at $50/Bbl
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LNG
The Importance of Qatar – Incremental
Liquefaction Capacity 2008-2012
The Importance of Qatar – Incremental
Liquefaction Capacity 2008-2012
0
20
40
60
80
100
2009 2010 2011 2012
Qatar Rest of the Worl
inmtpa
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LNG
Which Countries Will be the Drivers of
Supply Growth from 2013
Which Countries Will be the Drivers of
Supply Growth from 2013• It takes at least 48 months to construct a new
onshore liquefaction plant• Projects which have not yet taken a Final
Investment Decision (FID) can not start-upbefore 2013
• Over 270mtpa of new capacity at the planningstage to add to the close to 300mtpa inoperation or under construction
• Over 70% of the planned capacity is in four countries: Australia, Nigeria, Iran and Russia
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LNG
Impact of “Credit Crisis”Impact of “Credit Crisis”
• Industry in “wait and see” mode• Reductions in commodity prices have not yetfed through to liquefaction plant costs
• Availability of credit not yet tested
• General view is that credit will be available for “good” projects but financiers will be morerisk averse – Proven rather than new technology – Financially strong partners
– Creditworthy buyers• Potential for FIDs to be delayed in the hope
that the outlook will become less uncertain
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LNG
Global LNG Supply 2007 to 2020Global LNG Supply 2007 to 2020
0
100
200
300
400
500
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
2 0 1 0
In O pera t ion in Ja n 20 09 Under Con st ruc t ion in Ja n 20 09P lanned
inm
tpa
Average Annual Growth1980-2008 7.4%
2008-2012 11.9%2012-2020 5.0%
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LNG
Possible Global LNG Supply and Demand
2007 to 2020
Possible Global LNG Supply and Demand
2007 to 2020
0
100
200
300
400
500
600
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
2 0 2 0
In Operation in Jan 2009 Under Construction in Jan 2009
Planned Forecast Demand
inm
tpa
Possible Shortfall120mtpa in 2020
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LNG
LNG