page 1 examining the changing face of lng 15 th annual flame lng summit amsterdam, 9 th march 2009...
TRANSCRIPT
PAGE 1
Examining the Changing Face of LNG
15th Annual FlameLNG SummitAmsterdam, 9th March 2009
David FullerGlobal Head of LNG RWE Supply & Trading GmbH
PAGE 2RWE Supply & Trading
RWE AG (Group Center)
RWE PowerGermany‘s biggest power producer & among the largestin Europe
RWE InnogyThe leading European player in renewable energy activities
RWE DeaA significant exploration and production portfolio for hydrocarbons mainly in Europe and North Africa
RWE Supply & TradingResponsible for trading and the commercial optimisation of RWE‘s non regulated gas activities and our European energy business
RWE npowerResponsible for our UK energy business
RWE EnergySales and grid company for customers in Continental Europe
> Integrated business model: Strong presence along all parts of the energy value chain
> Stability and growth: Well-balanced portfolio of leading market positions in mature and growing markets in Europe
> Vertical integration and portfolio optimisation across the value chain
RWE – A Vertically Integrated Energy Business
PAGE 3RWE Supply & Trading
RWE Upstream & LNG activities throughout the world
Gulf Gateway
Wilhelmshaven GasPort
Northeast Gateway
Adria
Excalibur (traditional vessel)
Excelsior
Excellence
Excelerate
Explorer
Express (due Q2 09)
Exquisite (estimated Q3 09)
Expedient (estimated Q4 09)
Exemplar (estimated Q2 10)
LNG Fleet
Teesside GasPort
RWE Dea upstream activitiesBahia Blanca GasPort
Mina Al Ahmadi GasPort
LNG production
Snøhvit
AlgeriaLibya
Egypt
Mauritania
Poland Denmark
PAGE 4RWE Supply & Trading
RWE npower (UK)RWE Energy (Europe)RWE Supply & Trading RWE Dea
> Gas Reserves:ca. 539 mboe*(~ 78 bcm)
> Gas Production:ca. 22 mboe/year
(~ 3.2 bcm/year)
> Gas supply: ca. 40 bcm**/year
> Gas trading volumes: ca. 90 bcm/year
> Transport pipelines: 23,700 km
> Gas storage volume: ca. 6.1 bcm
> Length of the distribution pipelines: 92,800 km***
> Gas supply: ca. 40 bcm/year (supply of customers and power plants)
> Gas customers: ca. 10.6 million
Supply/Trading
Transport/Storage
Distribution SalesExploration/Production
RWE covers the entire gas chain – we will grow…
* mboe = million barrels oil equivalent; Reserves = proved and probable** bcm = billion cubic meters*** RWE will sell the gas transportation network in Germany
to an independent third party within the next two years****Gas supply and customers are 53bcm/year and 12..5million when combined with
recent acquisition Essent
PAGE 5RWE Supply & Trading
> RWE has the goal of increasing the gas supply base from approx. “40 bcm/a today to 60 bcm/a” by the year 2013
> Pipeline gas will contribute to new RWE supplies and there is also no doubt that LNG will also be a major contributor. Hence, secure access to LNG plays a key role in our strategy
> RWE is a leading company in the development of new pipeline routes into Europe (Nabucco)
> Our investment in Excelerate provides synergies between RWE´s upstream activities and the world´s LNG suppliers and RWE´s huge downstream market 2006 2013
40 bcm/a
RWE Procurement of gas[bcm/a]
More RWEproduction
New suppliersCaspian / Middle East
RUS
D
UK
NLNOR
Contractsexpiries
60 bcm/a
…and LNG plays an important role in our growth story
PAGE 6RWE Supply & Trading
The LNG business is seeing a worldwide period of unprecedented expansion…
Asia Pacific
Africa
Middle East
Europe & Eurasia
South & Central America
North America
Global LNG7%13% 15% 17%
2003 2010 2015 2020
7%13% 15% 17%
Bcm
1,000
2,000
3,000
4,000
0
Global Natural Gas Demand and LNG’s Share
Fundamentals:> LNG supply will increase from 262 bcm today to 341 bcm in 2010> Capacity of global LNG shipping will increase by more than half by 2010. 2008 will see a
record level of LNG-ships delivered – 58 ships added to existing fleet of 251> CERA estimates that 40% of LNG supply under construction is non-dedicated and flexible to
trade. Growing regasification network will allow arbitrage
Source: CERA
PAGE 7RWE Supply & Trading
Australia
S.E Asia
Norway
W. Africa
U.S
Trinidad
N. Africa Middle East
LNG Flows in 2008
LNG Markets
Supply Flows
2008
High Oil Prices made LNG attractive to Asian BuyersOil parity was attained by SellersSurging economies created gas demandCargoes could easily be diverted from other regionsDelays in liquefaction projects
New Sources in 2008Project Start Date Capacity (bcm)
Australia NW Shelf T5 2008 5.8
PAGE 8RWE Supply & Trading
Australia
S.E Asia
Norway
W. Africa
U.S
Trinidad
N. Africa Middle East
Changes in LNG flows
LNG Markets
Supply Flows
2008Supply Flows
2009
Russia
New Sources in 2009Project Start Date Capacity (bcm)Russia Sakhalin II T1 Mar-09 6.6Qatar QatarGas II T1 & 2 Apr-09 21.5Indonesia Tangguh T1 Jun-09 5.2Russia Sakhalin II T2 Jul-09 6.6Yemen Yemen LNG T1 Jul-09 4.5Indonesia Tangguh T2 Aug-09 5.2Qatar Ras Gas T6 Nov-09 10.7Yemen Yemen LNGT2 Dec-09 4.6
PAGE 9RWE Supply & Trading
… whereas the global LNG-Market is currently turning due to reductions in LNG demand in Asia
2009 LNG recession in Asia?
2007/2008 LNG boom in Asia
Strong Asia demand draws record LNG imports in '07Fri Jan 25, 2008
NEW YORK, Jan 25 (Reuters) - Strong Asian demand for liquefied natural gas, primarily from Japan, China and India, drove LNG imports in the region to record high levels last year, according to a Houston-based consulting firm.
“Asian LNG imports overall increased by a whopping 480 bcf (billion cubic feet, or 10 million tonnes), a record-setting import year. There was growth across the board for all importing countries in Asia," Waterborne Energy, which monitors the global flow of liquefied gases, said in a report this week.
For all of 2007, total Asian LNG imports hit a record 112.742 million tonnes, up 10 percent from 2006, according to Waterborne Energy data.
TEPCO Jan fuel use falls; nuke rate up, demand downFri Feb 13, 2009
TOKYO, Feb 13 (Reuters) - Thermal power consumption at Japan's Tokyo Electric Power Co (TEPCO) fell in January from a year earlier, as a higher monthly nuclear run rate and weakening energy demand dented fossil fuel use.
The use of fuel oil, crude oil, liquefied natural gas (LNG) and coal all dropped below the previous year's level, the company said in a statement on Friday, falling for the fourth straight month.
Japan Jan industrial output falls 10 pct mth/mthFri Feb 27, 2009
Japan's industrial output fell 10.0 percent in January from the previous month, government data showed on Friday, posting the biggest drop on record and in line with a median market forecast.
PAGE 10RWE Supply & Trading
How does RWE see the LNG-Market?
> The LNG growth story continues
> In 2008, traditional Atlantic Basin LNG supplies moved to Asia due to numerous factors which then combined reduced the availability of spot LNG cargoes in the Atlantic Basin.
> IN 2009 Asian demand had dropped and the market will return LNG flow back top the Atlantic Basin
> Substantial Change in Global Gas Market
– Isolated markets are becoming more integrated
– As more supply emerges arbitrage opportunities would cause a price convergence and the price differential between major demand regions will be unsustainable
PAGE 11RWE Supply & Trading
RWE´s believe: (Offshore) Flexibility is “the name of the game” in tomorrows volatile, global converged LNG business
> The LNG business will experience an uneven development across the value chain
> Regasification presents companies with a strategic dilemma
> Therefore, RWE is developing a flexible LNG solution offered by:
> Seeking investment opportunities in LNG
PAGE 12RWE Supply & Trading
Bahia Blanca GasPort, Argentina> Dockside LNG regasification
– Utilizes ship-to-ship LNG transfer with continuous natural gas send out
– Capable of 400 mmcfd throughput (closed-loop mode)
– Provides seasonal service during Argentina’s winter
> Short development time and low cost
– Final investment decision to in-service in less than 6 months
– Fixed facilities cost <5% of a land-based LNG terminal
> Project partners are YPF and Repsol-Gas Natural
> May 2009 will mark the start of the GasPorts second year of service
Dockside ship-to-ship LNG transfer
Excelsior docked at the Bahía Blanca GasPort
Gas offloading armGas offloading arm