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© POTEN & PARTNERS 2008
CONFIDENTIAL
LNG Supply Projects’ Competition Positioning in a Challenging Environment
February 9th 2017
Platts 16th Annual Liquefied Natural Gas Conference
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 2
Agenda
1 – Global LNG Market Opportunities and Challenges
2 – Emerging Trends
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 3
1– Global LNG Market Opportunities and
Challenges
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
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FEBRUARY 2017 Page 4
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030
MM
t/y
Americas
Europe
Niche Markets (Asia &
Middle East)
China & India
Japan, Korea, and
Taiwan
Emerging markets drive growth in global LNG
Global LNG Demand Forecast (2010-2030)
FORECAST
Source: Poten & Partners
MONTH 2009
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CONFIDENTIAL
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FEBRUARY 2017 Page 5
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030
MM
t/y
Supply Opportunity
for New Projects
Supply Under
Construction
Existing supply
LNG Demand
New LNG supply long-term opportunities start in 2022
Global LNG Demand vs. Committed Projects
FORECAST
Source: Poten & Partners
MONTH 2009
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CONFIDENTIAL
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FEBRUARY 2017 Page 6
100
150
200
250
300
350
400
450
End 2016production
Ramp up of existingproduction
Loss of existingproduction
Production underconstruction
Opportunities fornew projects
Market in 2025
Around 28 MMt/y of demand available globally to new LNG
supply projects by 2025
Note: *30.5 MMt/y production decrease includes Trinidad, Oman, Algeria, Nigeria, and Indonesia.
**112 MMt/y nameplate capacity, adjusted for operations and logistics factors.
257
MMt/y
34
MMt/y
98
MMt/y**
28
MMt/y
386
MMt/y
31 MMt/y*
MM
t/y
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
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FEBRUARY 2017 Page 7
Many LNG supply projects have challenges
Russia • Many projects but cost and
risk high
• Yamal has taken FID.
West Africa • Delayed by feedgas
availability and high costs
• Cameroon FLNG under
construction and potential
project in Equatorial Guinea
and Senegal/Mauritania
Australia • Will surpass Qatar as # 1
producer in the world
• But priced out of market
East Africa • Delayed by Government
establishing fiscal regime
North Africa • Output dropping (less than
50% utilization at plants) due
to increasing domestic
needs and struggling
production
North America • Canada challenged by high
cost
• US LNG needs substantial
re-marketing of volumes East Med
• LNG projects have struggled
to develop as Cyprus lacks
reserves and policies, cost,
and site challenges in Israel
delay project
Middle East • Domestic consumption has
limited export appetite
• Qatar debottlenecking
possible
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 8
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030
MM
t/y
East Africa
North America
Australia
West Africa
Qatar
North Africa
Malaysia & Indonesia
Others
Total Demand
North America and Africa to compete for post 2022
incremental LNG demand
Global LNG Supply Forecast (2010-2030)
FORECAST
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 9
0
50
100
150
200
250
300
350
400
450
2010 2015 2020 2025 2030
MM
t/y
Supply Opportunty
for New Projects
Supply Under
Construction
Existing supply
Global Demand Base
Case
Global Demand with
China & India Low
Case
New project opportunity projected to be delayed beyond 2025
with lower China/India LNG demand
Global LNG Demand with China & India Low Case vs. Supply Projection
FORECAST
Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 10
2 – Emerging Trends
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 11
• Originally, Asian buyers were acting as
“King Makers”
• Selecting winners – negotiating for better price levels
• Investing in upstream and liquefaction segments
• Bringing in “competitive” loans
LNG
Marketing Project FID Gas
Reserves
Engineering
Design &
Technology
Trend #1: Traditional Asian buyers have lesser appetite for
longer term deals and seeking to become portfolio players
• Presently, Asian buyers have limited
appetite for longer term deals
• Established Asian buyers are reacting to
the market, and seeking to become
“portfolio players/aggregators”
Government
Approval &
Action
Fiscal
Regime
Site
Acquisition Partner
Alignment EIA and
Permitting
Typical Project Timeline
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 12
LNG
Marketing Project FID Gas
Reserves
Engineering
Design &
Technology
Trend #2: Niche markets are emerging as key opportunities
for suppliers
Key uncertainties in niche markets • Credit ratings
• Seasonality requirements
• Infrastructure requirement and development
• Logistics of small scale
• Economics of small scale
• Timing
Government
Approval &
Action
Fiscal
Regime
Site
Acquisition Partner
Alignment EIA and
Permitting
Typical Project Timeline
Asian Niche LNG Demand Forecast
0
10
20
30
40
50
60
2010 2015 2020 2025 2030
MM
t/y
Others
Philippines
Pakistan
Indonesia
Singapore
Malaysia
Thailand
FORECAST
MONTH 2009
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CONFIDENTIAL
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FEBRUARY 2017 Page 13
0
10
20
30
40
50
60
2010 2015 2020 2025 2030
MM
t/y
Others
Philippines
Pakistan
Indonesia
Singapore
Malaysia
Thailand
LNG
Marketing Project FID Gas
Reserves
Engineering
Design &
Technology
Trend #2: Niche markets are emerging as key opportunities
for suppliers
Government
Approval &
Action
Fiscal
Regime
Site
Acquisition Partner
Alignment EIA and
Permitting
Typical Project Timeline
Asian Niche LNG Demand Forecast Key uncertainties in niche markets • Credit ratings
• Seasonality requirements
• Infrastructure requirement and development
• Logistics of small scale
• Economics of small scale
• Timing
Credit Ratings:
Investment Grade
Credit Ratings:
Non-Investment
Grade
FORECAST
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
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FEBRUARY 2017 Page 14
Trend #3: Downstream integration becoming more important
(Demand Creation)
Upstream Liquefaction Transportation Regasification Market
LNG Value Chain Integration
MONTH 2009
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CONFIDENTIAL
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FEBRUARY 2017 Page 15
Trend #4: Project costs are decreasing, led by US existing
and expansion projects
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016 2017 2018
US
D $
/tp
a
Australia USA Canada Worldwide FLNG
Global LNG Supply Projects’ EPC Costs
Note: Data points reflect FID dates Source: Poten & Partners
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 16
Trend #5: Buyers are seeking more flexible terms
Pricing
Destination
Volume
• Seasonality
• Indexation
• Price Levels
• Destination
Flexibility
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
FEBRUARY 2017 Page 17
Are you ready for these new trends?
• Established Asian buyers have limited appetite for longer term deals and
are reacting to the market, seeking to become “portfolio players/
aggregators”
• Niche markets are emerging as key opportunities for suppliers
• Buyers are seeking more flexible terms (volume, destination, pricing)
• Project costs are decreasing, led by US existing and expansion projects
• Downstream integration becoming more important (demand creation)
1
2
3
4
5
MONTH 2009
© POTEN & PARTNERS 2009
CONFIDENTIAL
© POTEN & PARTNERS
JANUARY 2017 Page 18
NATURAL GAS & LNG CONSULTING CONTACTS:
AMERICAS (NEW YORK)
Contact: Majed Limam
Email: mlimam@poten.com
Tel: +1 212 230 5407
EUROPE, M. EAST, AFRICA
Contact: Graham Hartnell
Email: ghartnell@poten.com
Tel: +44 20 3747 4820
ASIA PACIFIC
Contact: Stephen Thompson
Email: sthompson@poten.com
Tel: +61 8 6468 7942
AMERICAS (HOUSTON)
Contact: Doug Brown
Email: dbrown@poten.com
Tel: +1 713 344 2378
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