global lng market outlook and technology trends · dnv gl © 2016 ungraded 26 august 2016 some...

DNV GL © 2016

Ungraded

26 August 2016 SAFER, SMARTER, GREENER DNV GL © 2016

Ungraded

26 August 2016 Johan P. Tutturen

MARITIME

Global LNG Market Outlook and Technology Trends

1

LNG Opportunities for India – Norwegian Offerings

DNV GL © 2016

Ungraded

26 August 2016

Content

Market

Fleet

Design

Executive summary

2

DNV GL © 2016

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26 August 2016

3

Market

DNV GL © 2016

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26 August 2016

Market Development and Trends

Supply: – US/Canada – New players

– Australia - increasing

– East Africa? (Underdeveloped, but large potential)

– Asia Pacific

– Russia

– Many projects on hold or will stop due to market conditions

4

Demand: – Asia down 2015

– Egypt, Jordan, Pakistan emerging areas

– Expected future growth, but slow

Surprises could come from:

– Shale gas in China

– Coal bed methane in Australia

– Large gas reserves in the Arctic

– Iran as LNG supplier

Many different opinions as to where and when

Source: IGU World LNG Report 2016

DNV GL © 2016

Ungraded

26 August 2016

Some Numbers… (1)

5

1. Refers to anything not traded on long-term contracts. Up to mid-term contracts of 5 years. *IGU World LNG Report 2016

Trade

Global LNG trade of 244.8 MT in 2015, up 4.7 MT in 2014, highest ever.

Qatar remains largest exporter, and Middle East still largest region. Australia and rest of Asia-Pacific closing the gap.

Japan remained the world’s dominant importer (37% of global import)

72 MT of the LNG trade was traded on the short- and mid-term1 market in 2015 (29% of market)

DNV GL © 2016

Ungraded

26 August 2016

Some Numbers… (2)

6

Regasification

Global nominal regasification capability reached 757 MTPA in 2015

Global floating regasification capacity reached 77 MTPA in 2015 up 20.4 MTPA from 2014

1. Refers to anything not traded on long-term contracts. Up to mid-term contracts of 5 years. *IGU World LNG Report 2016

Liquefaction

Global nominal liquefaction capacity grew to 302 MTPA in 2015

– 142 MTPA of liquefaction capacity under construction Jan 2016

890 MTPA are the proposed liquefaction capacity in the new LNG frontiers, Jan 2016

– Demand expectations lower, likely to see cancellations

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Ungraded

26 August 2016

Contracts

The short- and mid-term trade constitutes 29% of total gross trade in 2015

Development caused by: – Flexible contracts

– More complexity in the market

– Sudden change in demand (e.g. Japan)

– Different prices in different basins

– Increase of fleet without long-term charter

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Source: IGU World LNG Report 2016

Source: International Energy Agency presentation, June 2015

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Ungraded

26 August 2016

Voyage Charter Party Designed for LNG Spot Market

BIMCO and the International Group of LNG Importers (GIIGNL) launched LNGVOY recently (2016)

The first voyage charter party designed for the LNG spot market

LNGVOY addresses four issues inherent in LNG shipping for voyage charters:

– Boil-off cap, compensation structure

– LN Heel terms

– Condition of cargo tanks on arrival

– Arrival at discharge port

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DNV GL © 2016

Ungraded

26 August 2016

LNG Trades in 2015

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Source: LNG trade based on AIS, DNV GL 2016

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26 August 2016

LNG Carriers – major trades

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?

?

? ?

?

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Liquefaction capacity – major projects under construction

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62 MTPA

53.3 MTPA

16.5 MTPA

6.3 MTPA

WORLD LIQUEFACTION CAPACITY 301.5 MTPA by Jan 2016

LIQUEFACTION CAPACITY UNDER CONSTRUCTION – 141.5 MTPA

2.4 MTPA

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Liquefaction Plants – April 2016

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On-stream

Under construction

Planned + Proposed/Understudy

Number in superscript indicate suspended or stalled projects

Source: “World’s LNG Liquefaction Plants and Regasification Terminals” – www.globallnginfo.com

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26 August 2016

Estimated regasification capacity – major growth markets

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65 MTPA

WORLD REGASIFICATION CAPACITY 757 MTPA by Jan 2016

EST. ADDITIONAL REGASIFICATION CAPACITY BY 2021 – 240 MTPA

80 MTPA

Average estimated expansion - 5 MTPA

15

10

DNV GL © 2016

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26 August 2016

Regasification Terminals – April 2016

14

On-stream

Under construction

Planned + Proposed/Understudy

Number in superscript indicate suspended or stalled projects

Source: “World’s LNG Liquefaction Plants and Regasification Terminals” – www.globallnginfo.com

DNV GL © 2016

Ungraded

26 August 2016

Expected Development of Trades (1)

Present

Middle East-Pacific trade down and Inter Pacific trades up in 2015

– Start up of Australian and PNG projects displaced Qatari supply

US started exporting from US Gulf, but still not major changes

– Main US capacity increase ready in 2017

– To start it will most likely serve Europe as Pacific region will have supply increase

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Future

Australia supply growing

USA and Canada supply growing

ME remains a big supplier

East Africa eventually

Expensive projects unlikely before mid-2020s

Any game changers?

DNV GL © 2016

Ungraded

26 August 2016

Expected Development of Trades (2)

2016-2018 increase in supply in Pacific region

– Will supply most of demand increase in the region

From mid-2017 a ramp-up of US capacity available

– Probably serving Europe mostly due to expensive transport in Pacific trade

Short term market increasing with relatively short distances

China may absorb less than expected of the increase

Brazil slow down may mute demands

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26 August 2016

17

Fleet

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26 August 2016

Fleet Status

LNG fleet at as of April 2016

– 65.3 M m3

– 447 ships

Some older ships in the fleet, bringing the average age to approx. 10 years

13 ships demolished from 2012

108 ships 5 years or younger (2011-present)

55% of the fleet younger than 10 years

Steady increase of max size last years flattening out (Except Qflex & Qmax)

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Source: Clarkson World Fleet Register (April 2016)

120000

140000

160000

180000

200000

220000

240000

260000

280000

2000 2005 2010 2015 2020

Max

. Cap

acit

y b

uilt

[cu

m]

Year Built

Max capacity excl.Qmax/Qflex

Qflex

Qmax

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26 August 2016

Shipbuilding Outlook

Drivers

– Shale gas revolution in the US

– Developments in Australia

Current forecast

– High levels until 2019

– Steady decline from 2017

– Current order book: 146 ships, 23.1 M m3

– 104 ships in 170-180k m3

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Source: Clarkson World Fleet Register (April 2016)

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26 August 2016

21

Vessel Design

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26 August 2016

Timeline towards 2030

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2016

NOx tier III for new builds in North

America

2015 2018 2030

EEDI phase 4?

2025 2020

Additional ECAs established

Operational requirements to CO2 emissions

HK Recycling convention ratified?

Adopted

In the pipeline, or possible…

Global CO2 monitoring, reporting

and verification

0.1% ECA sulphur limit

EU CO2 monitoring, reporting and verification

Ballast Water Convention - entry

into force

BC, noise, bio-fouling and VOC

regulation

EEDI phase 1 EEDI phase 2

EEDI phase 3

0.5% global sulphur cap

EU Recycling Regulation

EU 0.5% sulphur cap

US BW requirements

0.5% global sulphur cap

Carbon pricing?

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26 August 2016

Environmental/Regulatory Aspects

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Turkish Straits in 2017?

Hong Kong / Guangdong?

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26 August 2016

Limits for LNG Carriers

Physical limitations

– Post Panamax;

– Capacity 155-177k cu m*

– L, B, D Max: 366 m, 49 m, 15.2

– Air draft: 57,91 m

– Increasingly important due to US exports

– Suez: Maximum Air Draft : 68 m

– Japanmax: The landside infrastructure and commercial aspects are the limiting factors.

Except for the Panama-canal there is no real physical limitations for LNGCs.

– Terminals with limitations have enough smaller vessels to serve it

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DNV GL © 2016

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26 August 2016

Vessel Trends - LOA

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Values includes: 120 000 <Capacity [m3]<190 000 Clarkson April 2016

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26 August 2016

Vessel Trends – Type of Main Engine

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0

5

10

15

20

25

30

35

40

45

50

1976

1977

1978

1979

1980

1981

1983

1984

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2022

No.

Sh

ips

Year Built

Steam Turbine Motor Ship 2-Stroke

Diesel Electric Combined

Values includes: 120 000 <Capacity [m3]<190 000

0

20

40

60

80

100

120

140

160

No

. S

hip

s

Capacity [cu m]

Steam Turbine Motor Ship 2-Stroke

Diesel Electric Combined

DNV GL © 2016

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Design Speed

Majority of ships are designed for 19-20 knots

Possible Influences:

– Boil-off rates

– Efficiency

– Contracts

– Tradition

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0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

80,00%

15 - 15.9knots

18 - 18.9knots

19 - 19.9knots

20 - 20.9knots

21 - 21.9knots

% N

o.

of

vess

els

Design speed

180000 - 189999 cu m

170000 - 179999 cu m

160000 - 169999 cu m

150000 - 159999 cu m

About 50% did not have reported design speed

DNV GL © 2016

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26 August 2016

The story behind design speed 19,5 kn and sea margin

30

HILLI built in Stavanger (1974-1976) set in many areas the standard for future generations of LNG carriers.

HILLI and her two sister ships were designed for transportation of LNG from Abu Dhabi to Tokyo on a 20 years contract.

The main background for the chosen design speed of 19,5 kn + sea margin was:

– high boil-off rate of 0,25% per day

– long sailing distance between Abu Dhabi and Tokyo

– the ships and the land tanks provided the storage capacity in the transportation chain.

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26 August 2016

Operating Speed – World Fleet

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Including GT > 100 000 tonnes Time spent between 8 and 22 knots = 100%

38% of sailing time at 16-19 knots

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26 August 2016

DNVGL COSSMOS computer platform

In-house capability to analyse quantitatively and optimise machinery at the integrated system level:

Energy efficiency, Environmental performance, Safety, Costs

32

Component models library

Graphical environment to synthesise ship machinery systems

Model-based studies

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26 August 2016

Roundtrip comparison of alternative configurations and energy saving technologies

33

Techno-economic Comparison [All 2SDF cases include Main Engine Economisers (MEECO)]

1. Baseline DFDE

2. 2SDF, MEECO

3. 2SDF, Aux. Engine Economisers (AEECO)

4. 2SDF, PTO (Power Take Off)

5. 2SDF, PTO + AEECO

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26 August 2016

LNGreen comparison

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BASECASE LNGREEN

Cargo tank capacity (m^3) 174400 182500

Length overall (m) 299.5 299.5

Length between perpendiculars (m) 286.3 293.5

Breadth (Moulded) (m) 46.0 46.0

Depth to main deck (m) 26.5 26.5

Depth to trunk deck (m) 35.1 35.1

Design draft (m) 11.97 11.97

DNV GL © 2016

Ungraded

26 August 2016

Executive Summary

Trade

Global LNG trade of 245 MT in 2015, up 4.7 MT in 2014, highest ever

The spot and short-term trade constitutes 29% of total gross trade in 2015

Expected continued transition to more flexible market

Fleet

LNG fleet at as of April 2016, 447 ships of 65.3 M m3

Current order book: 146 ships, 23.1 M m3 – 104 ships in 170-180k m3

Design

Post Panamax LNGC to be expected?

Capacity 175 000+ m3, LOA≈300 m, B=49 m ?, D ≈13 m

Spot challenge – “rock’n roll” heating/cooling with many cycles

Flexible on speed, typically 15-18 knots

Containment important

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global lng market outlook and technology trends · dnv gl © 2016 ungraded 26 august 2016 some...

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