solomon peter … · new fsru projects a-grade b-grade non-investment grade source: shell lng...

SOLOMON PETER !I N V E S T M E N T S !

P R O V I D I N G A C C E S S T O E N E R G Y

www.solomonpeter.com

L N G : T h e R I S E O F A C O M M O D I T Y

Contents

SolomonPeterInvestments

OverviewofkeySupplyDemandTrends

ComponentsforCommoditization

CommoditizationTrends

Demand-sideBenefits:ExistingLNGMarkets

Demand-sideBenefits:NewLNGMarkets

ConclusionandKeyTakeaways

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Solomon Peter Investments!Providing Access to Energy

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Solomon Peter Investments is a boutique energy brokerage and advisory firm that offers transactional, commercial advisory and analytical support for cleaner energy initiatives, namely gas/LNG- related projects, (gas-to-power, water desalination, gas-to- industry), and renewables as well as procuring supply and financing as necessary.

Our expertise is not only based on our hand-on industry experience but also on our strategic partnerships that consist of:•  Project Developers•  Technology Providers•  State-owned entities•  Funds and Private Equity•  Banks•  Commodities Suppliers•  Other clean energy related initiatives

We have office located in the UAE and London, and are planning to open an office in Singapore this year.

Solomon Peter Investments!Value Chain Optimisation

ConceptDefinition

FeasibilityStudy

DealDevelopment

Financing

Operations

Marketanalysis,RegionalStudies;ProjectDueDiligence

EconomicEvaluation;FeasibilityStudies;RiskManagement;StrategyDevelopment

MarketingandOrigination;NegotiatingAgreements;CommercialStructuring;PermittingSupport

PrivateplacementofDebtandEquity;FinancialAdvisory

PortfolioOptimisation;SpotMarketSales;Hedging

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IntroductiontoSolomonPeterInvestments







- 5 -

LNG Output continues from Australia and the US

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-4

-2

0

2

4

6

8

10

12

Australia

USA

Angola

Nigeria

Malaysia

Algeria

Russia

Brun

ei

Papu

aNew

Guine

a

Equitoria

lGuine

a

Egypt

Oman

UAE

T&T

Peru

Norway

Indo

nesia

Qatar

MT NetExports:2017YoYAustralia:•  GorgonLNGT3(5.2MTPA)•  WheatstoneT1(4.5MTPA)USA:•  SabinePassT3&4

(9MTPA)•  CovePointT1(5.3MTPA)Russia:•  YamalT1(5.5MTPA)Malaysia:•  FLNGSatu(1.2MTPA)

Source: GIIGNL

China overtakes South Korea as the second largest LNG importer

-2

0

2

4

6

8

10

12

China

SouthKo

rea

Spain

Turkey

Fran

ce

Pakistan

Taiwan

Portugal

Italy

Thailand

Greece

Mexico

Malaysia

Poland

Nethe

rland

s

Jordan

India

Japa

n

Brazil

Jamaica

Israel

Belgium

Swed

en

Dom.Rep

Chile

Cana

da

Finlan

d

Kuwait

Columbia

Argentina

Singap

ore

USA

Lithua

nia

PuertoRico

Indo

nesia

UAE

Eqypt

UK

MT NetImports:2017YoY

0

5

10

15

20

25

30

35

Spot Contract

MT SpotvsContractedVolumes

Source: GIIGNL

Source: Shell LNG Outlook 2018

Source: SPI Contract Data

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Financial Liquidity soars on the Spot Market

Source: Shell LNG Outlook 2018Source: Platts JKM

Source: GIIGNL

- 8 -

Key Trends from 2017

RisingLNGSupply

IncreasingSpotMarketLiquidity

Risingdemand

fromExistingandNewBuyers

- 9 -








-10 -

6 Key Points of Commoditization

Commoditization

Liberalisation&3rdPartyAccess

FinancialHedgingavailable

LargernumberMarket

Participants

RisingSpotVolumes

ContractStandardisation

Mid&DownstreamInvestment

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- 12 -

Fundamental Indicators point to the Commoditization of LNG

- 13 -

0

20

40

60

80

100

2018 2019 2020

MTPA GrowthofFlexibleLNGSupply

Flexible Contracted

•  Failure to Deliver/Take •  Off-spec Gas •  Force Majeure •  Title Transfer •  Credit Support •  Applicable Laws and Disputes

Rising Uncontracted Supply Increasing Role of Intermediaries

Contract Standardisation Market Liberalisation & Third Party Access

Source: Shell LNG Outlook 2018Source: SPI: Contracts Data








- 14 -

Existing Markets: A bag of Uncertainties

JapanNuclearRestarts

0

20

40

60

80

100

120

02468

1012141618

Asatend-2017 LowCase ReferenceCase HighCase

FY2018

TWhNo.Reactors No.Reactors TWh(RHS)

0

2

4

6

8

10

12

Japan Taiwan SouthKorea

MTPA


Source: SPI Contract Data

Source: IEEJ

- 15 -

Est.ContractExpiries2018-2023Est.ContractExpiries2018-2023

Asia to remain as the worlds largest LNG importing region

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Increaseinspotmarketpurchasing

Leveragingthecurrent

buyersmarket

NewLNGbusinessmodels








- 17 -

New Markets Require Total Package Investment

- 18 -

DecliningDomesticProduction

LiquidFuelandCoal

Displacement

OffsetVariationinRenewableProduction

New Markets, New Challenges

0

1

2

3

4

5

6

7

8

UnderConstruction Proposed

No.ofProjectsNewFSRUProjects

A-Grade B-Grade Non-InvestmentGrade


Source: Moody’s

- 19 -

- 20 -

Albert Einstein: In The Middle Of Every Difficulty Lies Opportunity

RiskLayeringRiskManagement

TechnologicalAdvancements PolicyReforms

Source: Hoegh LNG PGN FSRU Lampung 3D Model- 21 -

PortfolioPlayers&TradingHouses

TechnologyProviders

LocalGovernments

Financing

Unlocking New Markets is a 4-fold Endeavour

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In Summary: The LNG market IS Commoditizing and bringing with it more Flexibility•  The key to unlocking new markets and remaining in existing markets is

FLEXIBILITY •  New Market – Flexibility in Financing •  Existing Markets – Flexibility in Contract Term

•  Industry expansions have been driven by a combination of two key trends, the gradual spread of gas on gas competition and the gradual transition to lower emission energy, both of which have affirmed LNG as a commodity in its own right • Growing destination flexible LNG volumes, mainly driven by US LNG

supplies, will continue to create a more liquid and transparent spot market which in turn will reduce price segmentation and encourage fair competition •  This will boost accessibility for new markets and promote diversification in

existing markets – both of which will play an increasingly vital role in the use of gas in the future energy mix of a post-COP 21 world.

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Thank You For Your Attention!

- 25 -

UAE

London(HQ)Singapore(planned)

MsZavierFrancisDirector,BusinessDevelopment

+44(0)7495834639+971(0)522467971

www.solomonpeter.com

solomon peter … · new fsru projects a-grade b-grade non-investment grade source: shell lng...

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