GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005 Short Term versus Long Short Term versus Long Term LNG Sales Term LNG Sales An Omani Viewpoint An Omani Viewpoint Bilbao Bilbao - - 16th March 2005 16th March 2005 Adnan Rajab Adnan Rajab Vice President Marketing & Shipping Vice President Marketing & Shipping Oman LNG LLC Oman LNG LLC
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Short Term versus Long Term LNG Sales An Omani Viewpoint · GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005 Short Term versus Long Term LNG Sales An Omani Viewpoint Bilbao
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GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005
Short Term versus Long Short Term versus Long
Term LNG SalesTerm LNG Sales
An Omani ViewpointAn Omani Viewpoint
Bilbao Bilbao -- 16th March 200516th March 2005
Adnan RajabAdnan Rajab
Vice President Marketing & ShippingVice President Marketing & Shipping
Oman LNG LLCOman LNG LLC
GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005
� OLNG and the LNG market in the mid-1990’s
� Challenges faced by OLNG
� OLNG’s experience with Short Term LNG sales
� An Omani view on the future of ST and LT LNG sales
Outline - Long Term versus Short Term Sales
GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005
OLNG at the Start
• Final Investment Decision (FID) in 1996
• Name-plate capacity : 6.6 mtpa
• By December 1998, OLNG had secured 3 Long-Term SPAs for a
total of 6.4 mtpa
(Kogas, Osaka Gas, Dabhol Power Company)
• 97% of plant capacity committed long-term
• This allocation reflected market realities in the late 90’s
GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005
LNG markets until the mid-90’s
� Far East dominant market for Middle Eastern Suppliers
� Clearly defined roles: upstream sponsors versus buyers
� National monopolies and regional utilities dominate markets
� Rigid contractual frameworks:
� Dedicated liquefaction and transportation capacities
� Single destination point with crude linked price
� No equity LNG
� Few spot transactions, arbitrage and diversions of cargoes
� No liquidity in LNG spot markets
GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005
New challenges faced by OLNGNew challenges faced by OLNG
� Collapse of DPC project in 2002 left OLNG with substantial
uncommitted capacity.
� Debottlenecking provided some 0.7 mtpa of additional capacity
� LNG market was a buyers’ market
� OLNG’s expectation was that market conditions for LT
contracts would be more attractive in 2006/2007 onwards
� OLNG decided to sell Short Term
GASTECH 2005 – Bilbao – Spain 14 – 17 March 2005
Challenge turned into advantage for OLNGChallenge turned into advantage for OLNG
� OLNG has broadened its customer base :
Asean LNG, BG, BP, Coral Energy, CPC, GdF, Iberdrola, Gas
Natural, Kansai Electric, Tepco, Tohoku Electric, Tokyo Gas,
Total, Tractebel, Union Fenosa Gas
� Explored areas of co-operation with other producers
� Swaps, back-hauling, supply assistance
Pertamina, Malaysia LNG, Woodside
� OLNG seized the opportunity to align with Government