GIE Annual Conference LNG : promoter of EU … · GIE Annual Conference LNG : promoter of EU Security and Diversity of Supply ? ... Project Calypso LNG

11GIE Bucharest 2008 Patrick-G. Wailliez

GIE Annual ConferenceLNG : promoter of EU Security and Diversity of Supply ?

Patrick-G. Wailliez – GDF Suez

GIE Bucharest 2008 Patrick-G. WailliezGIE Bucharest 2008


1. European Gas context

2. LNG Market

3. European Gas Perspectives


European Gas Transmission System

Trans Saharan Gas Pipeline

Source : IEA 2008 / TSGP


Ba rcelona

HuelvaCartagena

El Ferro l

Sagunt oSines

Bilbao

Mon toir

Zeebrugg e

Fos Cavao u

Isle of Gra in

Sou th Hook

Drago n

MarmaraEreglisi

La Spezia

Aliaga

BrindisiLivorn

(OLT)

Rosignano

Priolo

Oxelösu nd

TarantoGioiaTauro

Vasiliko s

SzczezinWilhelmshaven

Eems havenShannon

Anglesey

Teesside

San Ferdinando

PortoEmpedocle

Liongas

GATE

Bordeaux

Co

Black Sea LNG

nstanta

Le HavreDunk irk

Ravenna

Pegaz

Fier

Revythoussa

Wilhelmshaven 2Taqa

TrRovigo Montefalcone

Krk

ieste

Mediterra neanSea

AtlanticOcean

LNG terminals

existing 16

under construction 7

proposed 35

Gran CanariaTenerife

Gijón

European LNG Terminals

Source : CERA 2007, GdF Suez


Hydrocarbons Worldwide

70 % of World’s Oil, 40 % of Natural Gas


Gas Supply for Europe


Gas Supply for Europe

6000 km6000 km

4000 km4000 km

2000 km2000 km

In BCM

NORWAYNORWAY

VENEZUELAVENEZUELA

NIGERIA

ALGERIA

THE NETHERLANDS

RUSSIANFEDERATION

IRAN

QATAR

UKUK

ABUABU--DHABIDHABI

3 7003 700

4 2004 200

5100

4500

1 600

57 000

26 000

27 000

1 0001 000

5 6005 600

> 70% of the Proven Gas Reserves within economic Shipping DistanceSource: Cedigaz 2006

88GIE Bucharest 2008 Patrick-G. WailliezSource : IEA 2008, GIE, industry

EU: Supply Capacities in 2006 & 2015


EU : Natural Gas needs 2005-2025

543 bcm

2005

Imports

Source : European Commission / DG-TREN, 2007

Growing Needs & Supply Dependancy

EU domesticgas production

85 %

4 %2

629 bcm

2025

18 %

19%


LNG imports 2007 = 53 bcm≈ 10% consumption EU 27 + Turkey

Source: BP statistical review 2008

Belgium (19% LNG)

Portugal(54% LNG)

France (31% LNG)

Spain (69% LNG)

Italy(3% LNG)

UK (2% LNG)

Greece(20% LNG)

Turkey(17 % LNG)

GIE Bucharest 2008 Patrick-G. Wailliez

Europe : LNG Market Share by Country



2. LNG Market


1212GIE Bucharest 2008 Patrick-G. WailliezSources: Poten 2008, Industry

0

20

40

60

80

100

120

140

160

2000 2005 2010 2015

MMt/y

CAGR12%

Others

Evolution (2007↔ 2006) = - 28 in 2015 ≈ mainly due to USA

LNG Market Atlantic Bassin: Demand


0

20

40

60

80

100

120

140

160

180

200

2000 2005 2010 2015

MMt/y

Planned

Committed

Existing

~ 25%

Sources: Poten 2008, IndustrySimilar Curves for Pacific Basin

Atlantic Demand

Est. 2007

- Est. 2006

LNG Market Atlantic Bassin: Supply

25% of 2015 Demand covered by Planned Projects


0

50

100

150

200

250

300

350

400

450

500

2000 2005 2010 2015

MMt/y

Terminals:Under Regulat.Review

Terminals:Approved

Terminals:Under Construction

Terminals:Operating

Regasification: Huge projected Spare Capacity

Supply

Sources: Poten 2008, Industry

Atlantic Basin: Terminal capacity vs. Supply


LNG Regas Terminals in the Atlantic Bassin

Existing & ProposedNorth American LNG Terminals

Source : FERC oct 2008

Barcelona

Huelva Cartagena

ElFerrol

SaguntoSines

Bilbao

Montoir

Zeebrugge

FosCavaou

IsleofGrain

SouthHookDragon

MarmaraEreglisi

LaSpezia

Aliaga

BrindisiLivorn(OLT)

Rosignano

Priolo

Oxelösund

TarantoGioiaTauro

Vasilikos

SzczezinWilhelmshaven

EemshavenShannon

AngleseyTeesside

SanFerdinando

PortoEmpedocle

Liongas

GATE

BordeauxCo

Black Sea LNG

nstanta

LeHavreDunkirk

Ravenna

Pegaz

Fier

Revythoussa

Wilhelmshaven2Taqa

TrRovigo Montefalcone

Krk

ieste

MediterraneanSea

AtlanticOcean

LNG terminals

existing 16

underconstruction 7

proposed 35

Gran CanariaTenerife

Gijón

Source : CERA 2007, GdF Suez


x27

LNG Infrastructures Worldwide

Source: Petroleum Economist, LNG Journal, Enagas

Existing LNG TerminalsLNG Terminals under construction / committedLNG Terminals planned/under study

(58)(35-40)(70-80)

≈ 170

Existing Liquefaction TerminalsLiquefaction Terminals under construction/planned/under study

(21)(40-50)60-70


101

2

0

20

40

60

80

100

120

140

160

180

2000 2001 2002 2003 2004 2005 2006 2007

Spot & Short TermLong Term Trade

MMt/y

LNG Trade WW: LT ST

Increasing importance of Spot & ST TradesSources: Poten 2008, Industry

4/5

1/5

142

31

136125116116103101

2216

161086


LNG Trade WW: LT ST

101

2

0

20

40

60

80

100

120

140

160

180

2000 2001 2002 2003 2004 2005 2006 2007

Spot & Short termLong term trade

MMt/y

101 103116 116 125 136 142

3122

161610

6 8

Sources: Poten 2008, Industry

Spot & Short-Term Trades by Importer

0

5

10

15

20

30

2000 2001 2002 2003 2004 2005 2006

MMt/y

AsiaNorth AmericaEurope

2007

35

25

+31%

+26%

18

49

33

44

27

29

58

35

7

Spot trades: important Increase with highly Varying Destinations

2


EU LNG Terminal : Utilisation Rate

0

10

20

30

40

50

60

70

80

2002-2003 2004 2005 2006 2007

%

Source : GIIGNL 2008

72

565959

49

Moving from Base Load to Flex Terminals


Source: Poten & Partners 2008, Industry

LNG Supply Projections: recent evolution

2004 projection

2005 projection

2006 projection

2007 projection

150

200

250

300

350

2005 2010

2008 projection

Global liquefactionCapacity (MMt)

• LNG supply projections continue to slide

• Supply will be tight if some projects are postponed: Nigeria, Australia, Iran…


LNG : Costs evolution

• E&P- Drilling Rigs > x3- Steel > x2

• Liquefaction:coming on stream Now within 4 years

350-450 $/t 600-800 $/t(Lowest specific cost was 250 $/t only a few years ago)

• Shipping: 1,000 $/m3 1,400 $/m3

Over last 5 years time

Up to recently : important Rising CostsCredit Crunch => expected Cost Decrease …

… but Uncertainty not favorable for New Projects


Concerns about future Supply: LNG

• Evolution of Future Liquefaction Projects

• Geopolitical & safety constraints in some producing areas

• Rising internal demand (needs) in producing countries(competing with volumes for export)

• High incremental demand in some regions

• Environmental constraints


Shuttle Regas Vessel(SRV)

Floating Storage Regas Unit (FSRU)

LNG Carrier

Permanent Mooring

IN-LINE TIE-IN

FLOWLINE Main Line to Onshore Receiving Terminal

Mooring & Offloading Buoy

LNG Offshore Regas

Solution to Environnement Constraints & Security of Supply

Source : Project Calypso LNG - GdFSuez


Shuttle Regas Vessel(SRV)

Floating Storage Regas Unit (FSRU)

LNG Carrier

Permanent Mooring

IN-LINE TIE-IN

FLOWLINE Main Line to Onshore Receiving Terminal

Mooring & Offloading Buoy

LNG Offshore Regas

Solution to Environnement Constraints & to Security of Supply

Source : Project Calypso LNG - GdFSuez

Source: APL


Concerns about future Supply: LNG

• Evolution of Future Liquefaction Projects

• Geopolitical & safety constraints in some producing areas

• Rising internal demand (needs) in producing countries(competing with volumes for export)

• High incremental demand in some regions

• Environmental constraints

• Workload and potential bottlenecks for specialized contractors

• Impact of financial crisis

high competition for LNG- already tight in case of severe winter- potential inbalance needs production after 2010-2012



2. LNG Market



Concern about future EU Gas Supply

• Sufficient & Timely Investments a.o. in the upstream

• Perceived Security of Supply

• Competing Offtakes


European Gas Supply Competing Offtakes

Trans Saharan Gas Pipeline

Source : IEA 2008 / TSGP






• Predictability of demand and supply


Changes in European gas Markets (2007/2006)

> 6 %

1,5 % < < 6 %

-1,5 % < < 1,5 %

-6 % < < -1,5 %

< -6 %

NG consumption* change 2007/2006

* Including stock variations

Source : GdF Suez, Eurogas, Cedigaz

Impact of High Energy Prices + Financial Crisis (for the future)


Targets by 2020

20 % = renewablesshare

20% efficiencyincrease

20% reduction of greenhouse gases (*)

EU strategy for Climate protection: 3 Pillars

(*) compared to 1990


20 % = renewablesshare

20% reduction of greenhouse gases (*)

(*) compared to 1990

Climate protection: 3 Energies for 3 Pillars

Nuclear Renewables

Gas


Electricity Generation in the EU

TWh

1450

IEA Scenario Outlook

15% 35%

30003400

39004300

520 (x2.8)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2002 2010 2020 2030

nuclear coal oil gas hydro renewables

+1.3%/yr

+3.7%/yr


0

500

1000

1500

2000

2500

3000

3500

4000

4500

2002 2010 2020 2030

nuclear coal oil gas hydro renewables

Electricity Generation in the EU

TWh

1450

IEA Scenario Outlook

30003400

39004300

520

Gas for Power: 2/3 of gas demand Increase!

+ 90 BCM

Impact of extending Life of Nuclear power units



Measures have to be taken at EU level, Focusing on the Real Priorities




• Predictability of demand and supply

• Ability to Transfer Gas between the various regional grids• new Regulatory regime tends to Exhaust Spare Capacities• Gas Quality constraints• Heterogeneity of Operational Rules

• Shortage of Storage Capacity(growing needs as indigenous production replaced by long distance imports)


Regulatory and Political Issues at EU level

• Important Role of European authorities to- Define a Global Strong, Credible and Coherent EU Energy Policy

(S.o.S., Competitiveness, Single Market & Climate)

- Promote a New Type of Relationship with Historical Suppliers based on reciprocity and mutual trust & benefit (Leaving to the Industry the Entrepreneurial responsibilities)

• At regulatory level: promote a European Regulatory body

- Create suitable framework to Stimulate Investments(predictability; rate of return; exemptions where appropriate)

- Fill the regulatory Gap between the Countries and allow Real Interoperability

- Avoid unnecessary Weakening of some elements of the gas chain & the creation of a Regulatory ‘Pancaking’


Strategy Trend at Industry Level

• Consolidation and search for Scale to cope with new challenges

Critical Mass to:

- undertake the Huge Investments

- negotiate with Producers

- spread portfolio Risks (diversify sources & routes; balance LNG Pipe)

- offer Competitive Conditions and Excellent Services to Customers

• Vertical integration (up & downstream)

• Development new type of Relationships with Producers (JV for commercialisation, joint investments, assets swaps,…)


Mergers and Acquisitions

Source: Poweo, GdF Suez

2006-08

2005

2004

2006-2007

2004

2006

20062005

2001

2005 2008

2003

20062005

2005

2005

2005

2004

2005

2007

2007

Public takeover bidor repurchase (total or partial) achieved

Merger or public takeover bid under way

Takeover bidpossible or mentioned

FailureGaz de France

2006 2006

2009

2009


Gas in Europe : Conclusions

• Gas is abundant and Piped Gas together with LNG will continue to play a Key Role

• Increasing importance of LNG even if some uncertainties exist• Contributes to Diversification of Supply• Improves Arbitrage possibilities

• Important gas Quantities still have to be Contracted

• Europe will have to Compete in order to attract the necessary gas Supplies

• Market will be tight for the coming years and prices will become more volatile (as it is already the case for oil products)

• Compatibility between ‘Continuity of Supply’ & ‘Arbitrage opportunities’will have to be assured in such context

• A diversified portfolio based on Pipe Gas and Historical Supply sources remains the Corner Stone of a sound Supply Policy

• A Strong & consistent and a Stable & Predictable Framework are conducive to meeting required Timely Investments and Improve market Liquidity


GdF Suez putting its Energy at your Serviceand delivering the Essentials of Life


Diversified & optimized Natural Gas Supply portfolio over 100 bcm

2007 scope, without Distrigaz, including assets from ENI deal

Norway

Other

Middle East - Asia

Algeria

Russia

Trinidad and Tobago

Egypt

LibyaUnited Kingdom

Spot marketpurchase

The Netherlands


Rabaska

Sabine Pass

Isle of Grain

Idku

Montoir-de-Bretagne

Fos-sur-Mer

Kochi

15 LNG Tankers (+ 5 under construction)

Cartagena

Triton

GdF Suez : E&P and LNG Worldwide

SouthKorea

Japan

India

GreeceSpain

USA

Mexico

Atlantic LNG(Trinidad & Tobago)

Brass

NLNG

Dahej

SingaporeMejillones

Everett

Neptune Calypso

Penuelas*

Yemen LNG

Freeport

E&P

Presence

Production

Regas LiquefactionUnder Under

Construction ConstructionExisting

Capacity

Project Existing Project

Capacity& Equity

LNG

LT Supply

Spot Sales(2008)

Equity

Algeria

Nigeria

Egypt

NorwayZeebrugge

Huelva

Snøhvit

Skikda Arzew Bethioua

* Penuelas : Access through LT Sales

- Reserves : 667 Mboe (end 2007)

- Leadership in LNG- 1st Natural Gas Buyer in Europe

IvoryCoast

UK

DNL


Strong H1 2008 Results, Solid Balance Sheet,in a Difficult Environment

Gearing

18.815.8Net debt

+14%3.38€1.56

2.96€1.36

Net income, Group sharePer share

4.59

6.75

36.73

H1 2007In € bn H1 2008 H1 08/07 ∆

Revenues 43.13 +17%

EBITDA 8.13 +20%

Current Operating Income 5.49 +20%

29.2%

At 12/31/07

4444GIE Bucharest 2008 Patrick-G. WailliezGIE Bucharest 2008 Patrick-G. Wailliez

www.gdfsuez.com

Documents

GIE Annual Conference LNG : promoter of EU … · GIE Annual Conference LNG : promoter of EU Security and Diversity of Supply ? ... Project Calypso LNG