Transcript The Changing LNG paradigm 2015-20

The Changing LNG Paradigm 2015-20
Gastech 2014
March 25
Peter Thompson
© Gas Strategies 2014
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3 Events, 3 Continents, 3 Months, One Question:
How is North American LNG reshaping the
industry?
− London,
26/11/13
− Houston,
12/12/13
− Singapore,
6/2/14
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Our perspective – and our clients
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US LNG and the potential to change global LNG
Source: Gas Strategies
Source: IEA
Themes
1.
2.
3.
4.
The disaggregated Value
Chain
Acceleration and Disruption
Approach to financing
The effect on Global Trade
Source: Gas Strategies
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A disaggregated value chain
Offtaker
upstream
midstream
downstream
E&P led investors (IOCs etc)
Integrated Simultaneous Project Development
Gas cost driven by production economics
Plant a means of monetising gas
Gas producers already producing
Fragmented infrastructure – much pre-existing
Gas cost local market-price driven
© GasLiquefaction
Strategies 2014 plant an infrastructure play
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A disaggregated value chain
upstream
midstream
“Typical”
LNG
E&P led investors (IOCs etc)
Integrated Simultaneous Project Development
Gas cost driven by production economics
Plant a means of monetising gas
Utility and other market-led buyers
Aggregators
Price linked to end-market
Some destination restriction
DES or FOB
US LNG
downstream
Gas producers already producing
Fragmented infrastructure – much pre-existing
Gas cost local market-price driven
Liquefaction plant an infrastructure play
Aggregators
Smaller volumes per contract?
New entrants seeking volume
FOB, part of the flexible pool?
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Disruption and Acceleration
Acceleration
− Of new technology and contractors
− Of entry for new buyers and
traders – but do they have the
capability and organisation?
− Of access to volume for niche
buyers and additive value chains?
Disruption
− To market and marketing for
pre-FID projects
− To price (LT contracts and ST)
− Of existing contract prices via
PR?
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Finance: the choke on US expansion?
Market risks
− How do developers and financiers assess market risk? Which markets?
− Offtakers who do not yet have significant LNG experience?
− Is access to NBP an effective mitigant to price risk?
Contractual risks
− How robust and aligned are the contracts along the value chain?
− Can developers really insulate themselves from market risk?
− What happens if offtakers default or walk away from a project?
Operational risks
− Management of capacity holders, sometimes within a single train
− Inter-toller arrangements
− Responsibility for complete value chain
Construction risks
− Equity investors taking construction risk: is it understood?
− New Contractors and new technology: how financeable and reliable?
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Findings and Conclusions
− Effect on Global Trade?
− Uncertainty prevails
− Perception of big opportunity – especially for new
entrants
− Finance is key
− Ripples around the world
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What does it mean …
For developers?
− Structuring for finance and educating stakeholders
− Operating challenges along the value chain
For offtakers?
− Global, and complex, risk profile
− Operational / management requirement to deliver the
value chain
For financiers?
− Recognise the different risk profile of US LNG and
invest on that basis
− Be sure of mitigants
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