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BG North America
Energy Conference 2008Energy Information AdministrationElizabeth Spomer • Washington D.C. • 7 April 2008
2
Legal notice
A global leader in natural gas
The following presentation contains forward-looking statements concerning BG Group plc’s strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which BG Group plc operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which can be controlled or predicted. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from the guidance given in this presentation for a number of reasons. For a detailed analysis of the factors that may affect our business, financial performance or results of operations, we urge you to look at the “Risk Factors”included in the BG Group plc Annual Report & Accounts 2007. Nothing in this presentation should be construed as a profit forecast and no part of this presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. BG Group plc undertakes no obligation to update any forward-looking statements.
No representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information in this presentation and no responsibility or liability is or will be accepted by BG Group plc or any of its respective subsidiaries, affiliates and associated companies (or by any of their respective officers, employees or agents) in relation to it.
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The Future of LNG: Growth Spurts or Growing Pains?
• Industry background
• BG’s US experience (2002 – present)
• Key issues
• The future
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US LNG imports – the story so far ....
Trinidad & Tobago imports signalled a new era
0
20
40
60
80
100
120
Jan-
73
Jan-
75
Jan-
77
Jan-
79
Jan-
81
Jan-
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Jan-
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Jan-
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Jan-
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Jan-
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Jan-
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Jan-
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Jan-
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Jan-
99
Jan-
01
Jan-
03
Jan-
05
Jan-
07
Other (includes Qatar, Egypt, EG, Nigeria)
Trinidad
Algeria
US LNG imports by source
Bcf
/ m
onth
Source: DOE 2007
5
0
50
100
150
200
250
300
350
40019
65
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
North America
Europe
Asia Pacific
mtp
a Industry inflection point
(LNG growth 2005 – 2012 CAGR 12% with NA)
(LNG growth 1980 – 2004 CAGR 7%)
US market uplifted industry growth
Source: CEDIGAZ World Outlook (1999), BP Statistical Review (1999-2006) and Wood Mackenzie (Sept 2007) demand outlook
(LNG growth 2005 – 2012 CAGR 9% w/o NA)
LNG trade growth
6
Operational & planned
US LNG market – engine of growth 2002+
Total LNG = 96.5 mtpa
Tangguh 3.3
mtpa Skikda 1.2
ALNG t 4 5.2NLNG t 6,7 12.0
ELNG t 2 3.6
Snohvit t 1 1.8
RasGas t 6,7 15.6
EG t 1 3.7
Qatargas t 6,7 15.6
Brass LNG t 1, 2 10.0OK LNG t 1, 2 11.0
Gassi Touil 4.0
Yemen t 1,2 4.5Angola t 1 5.0
Supply projects
KeyOperational Planned
Underconstruction
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US
Atlantic Basin Pacific Basin
US LNG market – a global sink/source
US emerging as global LNG balancing market
USN.E. Asia
India
Europe
UK
China
• Strong seasonal pull• Spot at premium prices
• Deep, liquid market• Spot sink/source
• Strong seasonal pull• Spot at premium prices
• Deep, liquid market• Spot sink/source
US as balancing marketat present near future
?
Brazil
Chile
Traded markets
Bilateral markets
Other markets
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Exogenous factors
High oil / gas prices
Supply tightness
Globalization of trade
All driving arbitrage opportunities
Natural Gas prices – various markets
Market price overlap – global arbitrage opportunities emerging
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1995
1996
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2001
2002
2003
2004
2005
2006
2007
2008
$/m
mB
tu
UK (NBP)US (HH) Japan Ex Regas Japan (JCC)
Limited arbitrage
opportunity
Arbitrage opportunities
Data: JCC (Bloomberg), Japan EX Regas (BG est.), NBP (IPE), HH (NYMEX)
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Lake Charles import terminal
Flexible center of an evolving industry
10
0
10
20
30
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80
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Jan
Feb
Mar
Apr
May
June
July
Aug
Sep
tO
ctN
ovD
ec Jan
Feb
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tO
ctN
ovD
ec Jan
Feb
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tO
ctN
ovD
ec Jan
Feb
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tO
ctN
ovD
ec Jan
Feb
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June
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tO
ctN
ovD
ec Jan
Feb
Mar
Apr
May
June
July
Aug
Sep
tO
ctN
ovD
ec Jan
Feb
Mar
2002 2003 2004 2005 2006 2007 2008
Bcf
Lake CharlesElba Island, GACove Pt + Everett + Energy Bridge
Source: US Department of Energy (2002 to Jan 2008), Waterborne (Feb & Mar 2008)
US LNG imports 2002 – 2008
US as the balancing market in action
11
US as part of the global marketplace
Algeria
Australia
Egypt
Equatorial Guinea
MalaysiaNigeria
Trinidad & Tobago
OmanQatar
Belgium
Japan
FranceItaly
Mexico
Norway*
South KoreaSpain
Taiwan
TurkeyUAE
US
UK
India
Puerto Rico
BG’s US imports BG’s sales
*Commissioning cargo
Evidence of US emergence in global marketplace
2002 – Present
10 Suppliers
14 Markets
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Issues – FERC agenda Nov. 2007
• LNG’s role in US gas supply
• How does the US currently obtain the LNG it needs?
• Is there a need to change LNG procurement in the US?
• If so, what is needed to encourage contractual arrangements for LNG supply that will meet expected US demand for natural gas?
• Is imported LNG a dependable supply source?
• How is the U.S.’s role in the world LNG market changing?
Is the glass is half empty ?
13
Where will all the LNG go?
2006 seasonality superimposed on 2010 demand
2010 view of the global LNG balance
Source: Wood Mackenzie (2006), BG
0
Jan
Mar
May Ju
l
Sep Nov
Other
Mexico (east)
UK
EU Main
China
India
Taiwan
S Korea
Japan
Supply
10
20
30
40
bcf/d
14
US is the world’s LNG balancing market
NA inflow (spot)/outflow (divert) by month
0
2
4
6
8
10
Jan
Feb
Mar Apr
May Jun
Jul
Aug
Sep Oct
Nov
Dec
NA contracted* (3.0 tcf)
NA imports (2.6 tcf)
2010 estimated North American LNG volumes by month
*Excludes Altamira Source: Wood Mackenzie (2006), BG
Spot inflows observed during the summer
bcf/d
15
N America – LNG contracted*
Japan (LNG imports)
Can/Mex
US LNG imports
N America – LNG imports
US gas via
Can/Mex
0
2
4
6
8
10
12
14
16
1820
00
2005
2010
2015
2020
bcf/d
US LNG imports
Source: Wood Mackenzie (2007), BG
…Worlds largest LNG consumer by middle of next decade ?
*Includes existing and likely HoAs
BG North America
Thank you
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