LNG – a crucial component of European gas

industry

Michal Kocůrek

CEEC, Bratislava

19. listopadu 2019

Flexibility and supply security

2

LNG terminals in the EU

3

LNG Świnoujście

Panigaglia

Toscana

Porto Levante

Fos CavaouFos Tonkin

Sagunto

Cartagena

Barcelona

Bilbao

Montoir de Bretagne

Isle of Grain

Gate

Dunkerque

Zeebrugge

South Hook LNGDragon LNG

LNG Gdańsk

LNG Klaipeda

LNG

Croatia

LNG Brunsbuttel

LNG Wilhelmshaven

LNG Stade

Huelva

Sines

Mugardos

Revithoussa

Alexandroupolis

capacity EU

2019

212 bcm

projects by

2025

ca 34 bcm

2,6

6,1

5-8

10

5-8

4,5

Croatia

Alexandroupolis

Brunsbuttel

Wilhelmshaven

Stade

Gdańsk

capacity EU

2025

ca 250 bcm

2040 imports: approx. 345 bcm

total supply from sources with limited production or transport capacity - Norway, Algeria, Azerbaijan, East

Mediterranean – approx. 125 bcm

supply form flexible sources- Russia and LNG: approx. 220 bcm

LNG is the only source posessing the real power to reduce growing import dependency on one

supplier with dominant position

share of Russian gas and LNG on the European market is uncertain – key factors are:

– gas demand in the EU

– LNG price on the global market

– Gazprom sale strategy (market share vs. price)

Key import sources for the EU in 2040

4

0

4

8

12

16

20

24

leden únor březen duben květen červen červenec srpen září říjen

EU

R/M

Wh

ESP NCG BAFA

0

4

8

12

16

20

24

leden únor březen duben květen červen červenec srpen září říjen

EU

R/M

Wh

ESP NCG BAFA

ESP and German market price correlation in 2019

5

source: S&P Platts, Gazprom Exxport, BAFA

avg. price

ESP 15,42

NCG 14,02

BAFA 16,94

EUR/MWh

EU 2018

53,2 mld.

m3

0

4

8

12

16

20

24

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

EU

R/M

Wh

ESP NCG BAFA

EU 2018

53,2 mld. m3

LNG price

6

0

20

40

60

80

100

120

6

9

12

15

18

21

24

01 02 03 04 05 06 07 08 09 10 11

mil.

m3

EU

R/M

Wh

FR LNG NL LNG TTF TRF VTP AT

Natural gas price on the European markets in 2019

7

source: S&P Platts, ENTSO-G

0

20

40

60

80

100

120

6

9

12

15

18

21

24

01 02 03 04 05 06 07 08 09 10 11

mil.

m3

EU

R/M

Wh

FR LNG NL LNG TTF TRF VTP ATEU 2018

53,2 mld. m3

Apr-Jul

2,5 EUR/MWh

0

20

40

60

80

100

120

6

9

12

15

18

21

24

01 02 03 04 05 06 07 08 09 10 11

mcm

/d

EU

R/M

Wh

FR LNG NL LNG TTF TRF VTP AT

2019 commodity liquefaction transport regasification total

Qatar - EU 5,12 7,31 3,36 1,46 17,25

USA - EU 7,92 5,85 2,31 1,46 17,54

VTP CZ 15,02 15,02

BAFA 16,94 16,94

Gazprom Export 17,27 17,27

Cost of gas imports to the EU (EUR/MWh)

8

source: OIES, S&P Platts, Gazprom Export, BAFA, EIA

LNG supplies in the EU are competitive with all the external import sources

2019 commodity liquefaction transport regasification total

0

50

100

150

200

250

300

350

400

2014 2015 2015 2016 2017 2018 2018 2019

mil.

m3/d

en

LNG supplies to the EU from 2014 to 2019

9

zdroj: ENTSO-G

EU 2019

80,8 bcm

EU 2018

53,2 bcm

key role of UGS for LNG supply growth, synergy instead competition

0

20

40

60

80

100

120

6

9

12

15

18

21

24

01 02 03 04 05 06 07 08 09 10 11

mcm

/d

EU

R/M

Wh

FR LNG NL LNG TTF TRF VTP AT

Story

10

Lithuanian FSRU terminal in Klaipeda

11

start-up:

2014

capacity:

4,4 bcm

total supply:

5,2 bcm

2018 supply:

0,8 bcm

2019 supply:

1,4 bcm

Poland – future main importer of LNG in the EU

12

volume expiration start-up

bcma years year

Qatargas Qatar up to 2,9 20 2016 DES yes

Centrica LNG Company UK 0,3 5 2018 DES yes

Cheniere USA 0,7 4 2019 DES yes

Port Artur LNG USA 2,7 20 2023 FOB no

Venture Global Calcasieu Pass USA 1,36 20 2023 FOB no

Cheniere USA 1,95 20 2023 DES yes

Venture Global Plaquemines LNG USA 1,36 20 2024 FOB no

Venture Global Plaquemines LNG USA 2 20 2024 FOB no

total in 2024 12,07

country of

origin

existing

sourcesupplier supply model

PGNiG – LNG supply contracts

13

source: PGNiG, S&P Platts,

0

4

8

12

16

20

24

28

2016 2018 2020 2022 2024 2026 2028 2030

bcm

Qatargas Centrica Cheniere spot Venture Global

Port Arthur Baltic Pipe moderate optimal

0

4

8

12

16

20

24

28

2016 2018 2020 2022 2024 2026 2028 2030

bcm

Qatargas Centrica Cheniere spot Venture Global

Port Arthur Baltic Pipe moderate optimal

source: PGNiG, Gaz-System,

LNG contracts vs. domestic demand outlook

14

LNG will enable Polish gas exports to neighbouring countries

LNG offers flexible and diversified gas supplies

gas price hits historic floor due to LNG supplies

gas advocacy: LNG makes the EU less dependent on coal and Russia

Impact of LNG supplies on the European gas industry

15

Thank you for your attention

Michal Kocůrek

michal.kocurek@egubrno.cz