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What Will Be the Impact of Qatar’s Six Mega-Trains on the Global LNG Market?

7 th Doha Natural Gas Conference and Exhibition Doha, March 9 th -12 th 2009. What Will Be the Impact of Qatar’s Six Mega-Trains on the Global LNG Market?. Andy Flower Independent Consultant. LNG in 2008. Global LNG trade fell marginally in 2008, the first fall since 1980 & 1981

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What Will Be the Impact of Qatar’s Six Mega-Trains on the Global LNG Market?

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  1. 7th Doha Natural Gas Conference and Exhibition Doha, March 9th-12th 2009 What Will Be the Impact of Qatar’s Six Mega-Trains on the Global LNG Market? Andy Flower Independent Consultant

  2. LNG in 2008 • Global LNG trade fell marginally in 2008, the first fall since 1980 & 1981 • The problem was on the supply side with only 5 of the 15 exporting countries increasing their exports • The reasons for the lower than expected outcome include • Shortage of Gas Supply: e.g. Nigeria, Indonesia, Oman, Egypt • Force Majeure: e.g. Nigeria, Algeria • Technical Problems: e.g. Norway, Australia NWS Train 5 • Delays in Start-up: e.g. Qatargas II Train 1, Indonesia (Tangguh), Sakhalin

  3. LNG Trade by Exporter 1964 – 2008 7.4%pa in mtpa

  4. Outlook for LNG Supply 2009 to 2012 • 95.3mtpa of new production capacity now under construction scheduled to come on stream between 2009 and 2012 Qatar 46.8mtpa Indonesia 7.6mtpa Russia 9.6mtpa Yemen 6.7mtpa Malaysia 1.5mtpa Peru 4.4mtpa Australia 4.3mtpa Angola 5.2mtpa Algeria 9.2mtpa

  5. Global LNG Supply from Plants in Operation and Under Construction in January 2009 11.9%pa in mtpa In mtpa

  6. Firm and Flexible Markets for LNG • Firm • Markets which have to have the LNG supply and will pay the price needed to secure cargoes • Asia, southern Europe (Turkey, Spain, southern France, Portugal), Latin America, Caribbean, New England (USA) • Flexible • Markets with alternative pipeline gas supplies where price will determine whether LNG is imported • USA (Gulf of Mexico, West Coast), UK, Belgium, Netherlands

  7. LNG Demand Outlook 2009-2012 • The increase in supply comes at a time when demand is weakening in most of the firm LNG markets • Asian imports in 4Q08 down 5% compared with 4Q07 (and lower than 3Q08) • Imports in firm European markets up by 14% in 1H08 (compared with 1H07), unchanged between 2H07 and 2H08 • Main increase in imports into firm markets in the 2H08 has been in the new markets in the Americas (Argentina and Mexico)

  8. Short-term Cargoes from the Atlantic Basin Received by Asian Buyers in 2007 to 1Q2009 In mt

  9. LNG Demand in Firm Markets and Global Supply 2007-2012 Available for Flexible Markets in mtpa In mtpa

  10. Natural Gas, LNG and Crude Oil Prices Jan 2008 to Dec 2010 Outlook at $50/Bbl Actual In $/MMBtu

  11. The Importance of Qatar – Incremental Liquefaction Capacity 2008-2012 in mtpa

  12. Which Countries Will be the Drivers of Supply Growth from 2013 • It takes at least 48 months to construct a new onshore liquefaction plant • Projects which have not yet taken a Final Investment Decision (FID) can not start-up before 2013 • Over 270mtpa of new capacity at the planning stage to add to the close to 300mtpa in operation or under construction • Over 70% of the planned capacity is in four countries: Australia, Nigeria, Iran and Russia

  13. Impact of “Credit Crisis” • Industry in “wait and see” mode • Reductions in commodity prices have not yet fed through to liquefaction plant costs • Availability of credit not yet tested • General view is that credit will be available for “good” projects but financiers will be more risk averse • Proven rather than new technology • Financially strong partners • Creditworthy buyers • Potential for FIDs to be delayed in the hope that the outlook will become less uncertain

  14. Global LNG Supply 2007 to 2020 Average Annual Growth 1980-2008 7.4% 2008-2012 11.9% 2012-2020 5.0% in mtpa

  15. PossibleGlobal LNG Supply and Demand 2007 to 2020 Possible Shortfall 120mtpa in 2020 in mtpa

  16. LNG

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