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© POTEN & PARTNERS 2008 CONFIDENTIAL
Where will all the Homeless LNG go?
Platts 15th Annual Liquefied Natural Gas Conference
February 18-19 2016
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 2
Agenda
1. Global LNG Supply/Demand Update
2. What is “Homeless LNG”?
3. Where is “Homeless LNG” being supplied from?
4. Destination opportunities
5. Will the price be right?
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 3
0
50
100
150
200
250
300
350
400
450
2005 2010 2015 2020 2025
MM
t/y
Americas
Europe
Niche Markets(Asia & ME)
China & India
Japan, Korea &Taiwan
LNG demand projected to reach 400 MMt/y by 2025
Global LNG Demand Forecast (2005-2025)
FORECAST
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 4
0
50
100
150
200
250
300
350
400
450
2005 2010 2015 2020 2025
MM
t/y
Supply UnderConstruction
Existingsupply
LNG Demand
Supply opportunities for new projects beyond 2022
Global LNG Demand vs. Committed Projects (2005-2025)
Source: Poten & Partners
FORECAST
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 6
0
20
40
60
80
100
120
2010 2015 2020 2025 2030
MM
t/y
Flexible/homeless LNG
Middle East
Pacific
Atlantic
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030
MM
t/y
Flexible/homeless LNG
Around 110 MMt/y of “Homeless LNG*” by 2030Around 25% of global trade, to compete with new projects
Global supply
Locked in long & medium-term
Homeless LNG (Spot and aggregator LNG not sold to end user LNG buyers)
Percentage of homeless LNG vs. Global LNG Demand
28% 18% 23% 26% 25%Note*: Homeless LNG could eventually be locked in to short-term, mid-term, long-term contracts.
It is important to note “Homeless LNG” will not stay homeless for ever, as many suppliers are currently seeking long-term sales for these volumes and may succeed – moving homeless to the long-term column
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 8
Several potential “homes” for homeless LNG…China and India• China and India will
grow but constrained by price controls
• Lower GDP growth and weakening power demand
Japan Korea Taiwan• LNG challenged by
Increased competition from coal and nuclear
• Limited flexibility as no gas on gas market and deregulation taking too slow
SE Asia• Growing LNG requirement,
as natural gas displaces liquids in power generation but limited flexibility due to fragmented markets
Middle East• Stagnating production and
growing demand driving LNG growth
• Limited flexibility due to limited regional gas trade and strong government control of gas industry
South America• Declining production,
pipeline trade and growing demand promote LNG
• Limited flexibility due to limited gas trade within region
North America• Highly liquid gas-on-gas
market of last resort that never developed due to shale gas revolution
NW Europe• Gas-on-gas market
provide access to flexibility through liquidity and regasification capacity
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 10
0
5
10
15
20
25
30
35
40
2005 2010 2015 2020 2025
MM
t/y
Northwest Europe is LNG market of last resort
UK, Belgium and the Netherlands LNG imports
FORECAST
Fukushima + Economic
downturn in Europe Homeless LNG
push into NW Europe
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 11
0
2
4
6
8
10
12
14
16
18
20
22
24
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
NBP
Is US LNG trade to NW Europe profitable?
Henry Hub
Relative NBP to HH price relationship for US liquefaction
Trade into NBP markets are economic
Trade into NBP markets are un-economic Trade into NBP markets are economic
Trade into NBP markets are un-economic
Based on cash cost onlyBased on full life-cycle cost
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 12
Baseload needs
Long-term requirement(ability to sign TOP
agreement)
Natural gas pricelevels
Market liquidity and depth
Need for more LNG
What does comparative analysis reveal?
Market Attributes Northwest Europe South America & Caribbean Southeast Asia China & India
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009 CONFIDENTIAL
© POTEN & PARTNERSFEBRUARY 2016 Page 13
NATURAL GAS & LNG CONSULTING CONTACTS:
AMERICAS (NEW YORK)Contact: Jim Briggs
Email: [email protected]: +1 212 230 2000
EUROPE, M. EAST, AFRICAContact: Graham Hartnell
Email: [email protected]: +44 20 3747 4820
ASIA PACIFICContact: Stephen Thompson
Email: [email protected]: +61 8 6468 7942
AMERICAS (HOUSTON)Contact: Doug Brown
Email: [email protected]: +1 713 344 2378