Embed Size (px)
Citation preview
How the IMO 2020 Regulation Will
Impact the LNG Market
Jeff Moore
Manager - LNG Analytics Asia
S&P Global Platts
Agenda – IMO 2020 Will have Three Major Impacts on
the LNG Market
• The regulation will help spur LNG demand within marine bunkering
• High Sulphur Fuel Oil (HSFO) prices will fall as a result of the
regulation, which could slow some LNG adoption in the power
sector in select countries
• Oil prices will increase, which will have a direct impact on LNG
contract prices, but spot prices will not be impacted as much
IMO 2020 Will Have a Dramatic Impact on Global
Bunker Demand
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
MB
/D
Global Bunker Demand
HSFO LSFO LS HSO Distillates for Blending Distillates LNG
Source: S&P Global Platts Analytics
Takeaway 1: LNG Demand Creation in the Bunkering
Sector
-
5.0
10.0
15.0
20.0
25.0
30.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
MT
PA
LNG as a Bunkering Fuel
LNG as Bunkers in LNG Carriers (boil-off) LNG as Bunkers in Non-LNG Vessels
Source: S&P Global Platts Analytics
Takeaway 2: Demand Destruction for LNG In Power
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
2015 2016 2017 2018 2019 2020 2021 2022 2023
$/M
MB
TU
HS Fuel Oil versus NE Asian Spot Prices (Platts JKM)
HS Fuel Oil Singapore 380 JKM
LNG prices expected to
increase due to lack of
new supply
Source: S&P Global Platts Analytics
Takeaway 2: Demand Destruction for LNG In Power
0
100
200
300
400
500
600
700
800
MB
/D
2016 burn 2020 from plants newbuild 2020 additional spare capacities from 2016
Source: S&P Global Platts Analytics
Takeaway 3: Changes in LNG Pricing Dynamics
Source: S&P Global Platts Analytics
$0.00
$3.00
$6.00
$9.00
$12.00
$15.00
$/M
MB
TU
Global LNG Prices
13.5% 3 Mo Brent + $1 Weighted Avg Asian Contract Platts JKM
Correlation between Brent and weighted
average Asian contract price = 0.76
Takeaway 3: Changes in LNG Pricing Dynamics
Source: S&P Global Platts Analytics
0
10
20
30
40
50
60
70
80
2016 2017 2018 2019 2020 2021 2022
MT
PA
US LNG Exports 2017/8 US LNG deliveries
by destination
47%
to Asia
31% to
Americas
8% to
Middle
East
14%
to Europe
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
$/M
MB
tu
Global LNG Prices and Forecast
Platts JKM TTF 13.5% Brent + $1 Henry Hub
Takeaway 3: Changes in LNG Pricing Dynamics
Source: S&P Global Platts Analytics
Spot prices in Asia
(Platts JKM) expected
to diverge from oil-
linked contract prices
