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GAS PRICES AND PRICING. Peter Ross, Wimbledon Energy Slide. GAS PRICING. Peter Ross, Wimbledon Energy Slide. GAS PRICING. Peter Ross, Wimbledon Energy Slide. GAS PRICING. Peter Ross, Wimbledon Energy Slide. CRUDE OIL INDEXATION. Peter Ross, Wimbledon Energy Slide. CRUDE OIL - JCC.

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gas prices and pricing
GAS PRICES AND PRICING

Peter Ross, Wimbledon EnergySlide

gas pricing
GAS PRICING

Peter Ross, Wimbledon EnergySlide

gas pricing1
GAS PRICING

Peter Ross, Wimbledon EnergySlide

gas pricing2
GAS PRICING

Peter Ross, Wimbledon EnergySlide

crude oil indexation
CRUDE OIL INDEXATION

Peter Ross, Wimbledon EnergySlide

crude oil jcc
CRUDE OIL - JCC

The average of 17 crude oils imported into Japan

History

Relevance now?

Peter Ross, Wimbledon EnergySlide

crude oil jcc1
CRUDE OIL - JCC

Japanese consumer still pays too much for energy

And

Still a very rich consumer economy

Peter Ross, Wimbledon EnergySlide

crude oil jcc2
CRUDE OIL - JCC

“Hold close to nurse

for fear of something worse”

Peter Ross, Wimbledon EnergySlide

rasgas selling to petronet
RasGas SELLING TO PETRONET

Volume building 2.5 mty to 5 mty LNG

25 years

MBQ (take or pay) basis

Price indexed to JCC

3 Indian company marketing team

Peter Ross, Wimbledon EnergySlide

indian market for gas
INDIAN MARKET FOR GAS

Power + fertiliser 80%

Peter Ross, Wimbledon EnergySlide

indian market for gas1
INDIAN MARKET FOR GAS

Fuel – naphtha

Replace with pipeline gas

Peter Ross, Wimbledon EnergySlide

indian market for gas2
INDIAN MARKET FOR GAS

Pricing naphtha

Crude oil * 1.2

current / historic assumption ?

Peter Ross, Wimbledon EnergySlide

indian market for electricity
INDIAN MARKET FOR ELECTRICITY

Relationship to crude oil ?

Relationship to naphtha ?

Future relationship ?

Peter Ross, Wimbledon EnergySlide

indian market for electricity1
INDIAN MARKET FOR ELECTRICITY

End-user ability to pay?

State electricity boards?

NTPC declined LNG proposal as too expensive - preferred their own tender

Compare fertiliser companies as a market

Peter Ross, Wimbledon EnergySlide

qatar as producer
QATAR AS PRODUCER

Drill and produce gas

Sell gas, LNG and condensate

Use ethane

Build liquefaction, jetties, etc

Use gas for power

Peter Ross, Wimbledon EnergySlide

qatar as producer1
QATAR AS PRODUCER

Raise finance

Load LNG ships

Use boil-off

Diesel?

Unload

Receive USD

Peter Ross, Wimbledon EnergySlide

qatar as producer2
QATAR AS PRODUCER

LNG price

Relevance of crude oil?

Relevance of JCC?

Peter Ross, Wimbledon EnergySlide

qatar as producer3
QATAR AS PRODUCER

Gas price for projects in Qatar

is not related to

JCC;

or to Crude oil

Peter Ross, Wimbledon EnergySlide

oman as producer
OMAN AS PRODUCER

Gas into fertiliser plant

For export to India

Price is $0.80

Not JCC

Peter Ross, Wimbledon EnergySlide

india gas price at consumer gate
INDIA - GAS PRICE AT CONSUMER GATE

LNG price DES excludes

Regas facilities andVery high customs duty on LNG capital goods

Very high Import taxPipeline transport

Peter Ross, Wimbledon EnergySlide

india gas price at consumer gate1
INDIA - GAS PRICE AT CONSUMER GATE

Consumer can afford maximum $3.50 at gate

Suggests LNG max DES $2.50

Most need a lower price

Peter Ross, Wimbledon EnergySlide

india gas price at consumer gate2
INDIA - GAS PRICE AT CONSUMER GATE

Domestic production approx. $2 to $3.5 delivered

Can be complex / subsidised

Can be localised e.g. NE Region

1997 target: parity fuel oil in 4 years

Rs 2,850 / m3 (2002) + tax + transport

40% Fuel Oil parity 2002 estimate

Peter Ross, Wimbledon EnergySlide

india gas price at consumer gate3
INDIA - GAS PRICE AT CONSUMER GATE

Gas Consumer targets include

NTPC LNG $2.50 to $3.00 Enabling 2.5c to 3.0 c/kWh

Also = Dhabhol viability estimate

“Stability” Naphtha minus 20%

Peter Ross, Wimbledon EnergySlide

india price for imported gas
INDIA - PRICE FOR IMPORTED GAS

August 2002 sign main price terms

Base JCC = $18 LNG des = $2.28

Seller proposes

Floor JCC = $16 LNG des = $2.03

Cap JCC = $24 LNG des = $3.04

And finalise fully termed GSPA asap ........

Peter Ross, Wimbledon EnergySlide

india price for imported gas1
INDIA - PRICE FOR IMPORTED GAS

November 2002

Seller: OK,

Cap reduced to JCC = $21 to $22

Provided GSPA signed very soon OrRevert to previous pricing

Peter Ross, Wimbledon EnergySlide

india price for imported lng
INDIA - PRICE FOR IMPORTED LNG

February 2003

No sales at all announced

To Indian consumers

By LNG Buyer

Peter Ross, Wimbledon EnergySlide

india price for imported lng1
INDIA - PRICE FOR IMPORTED LNG
  • Negotiating position of seller
  • Consumers price expectation now
  • Gas discovery in India
  • LNG Buyer’s terminal
  • Pipeline

Peter Ross, Wimbledon EnergySlide

india price for imported lng2
INDIA - PRICE FOR IMPORTED LNG

Who can afford to move?

Indian consumer?

Qatari seller of gas and associated liquids?

Indian government?

Peter Ross, Wimbledon EnergySlide

indian government role
INDIAN GOVERNMENT ROLE

Low LNG import price – good for

Clean efficient industry Balance of payments Indian tax base versus end-user

Other countries phasing out import taxKorea – no tax on LNG import for power

Peter Ross, Wimbledon EnergySlide

lng pricing indxation
LNG PRICING INDXATION

Includes

Mixed basket

Coal indexed

etc

Peter Ross, Wimbledon EnergySlide

lng pricing
LNG PRICING
  • We’ve seen
  • Oman remove the floor
  • Tepco and Tokyo Gas concede
  • volume and shipping flexibility
  • Customer responsive
  • Trinidad to USA / Netback

Peter Ross, Wimbledon EnergySlide

lng pricing general
LNG PRICING - GENERAL

Peter Ross, Wimbledon EnergySlide

lng pricing1
LNG PRICING

Now much more competitive

Limited market for LNG

Inflexible deliverability

Price is coming down

Peter Ross, Wimbledon EnergySlide

gas pricing3
GAS PRICING
  • Equatorial Guinea
  • Big gas find
  • Rapid development
  • Price of gas 25 cents into plant
  • Profit from royalty and NPI on plant
  • LNG and GTL for next development

Peter Ross, Wimbledon EnergySlide

gas pricing4
GAS PRICING

Move bulk at low price

Collect rent mid and down stream

Add value; service; associated liquids

Peter Ross, Wimbledon EnergySlide

gas pricing5
GAS PRICING

Possible:

Market related LNG versus traditional pricing -flexibility

Gas long market erodes MBQs – classic

Increased infrastructure = competition = erosion of MBQs

GTL priced against oil products netback – “no gas price”

Peter Ross, Wimbledon EnergySlide

gas pricing6
GAS PRICING
  • Gas increasingly as a commodity
  • Market gas long?
  • Failure to monetise – competition
  • Take your profit where?
  • Market segmentation
  • Risk diversification

Peter Ross, Wimbledon EnergySlide

gas pricing7
GAS PRICING
  • OR
  • STORE IT IN THE GROUND

Peter Ross, Wimbledon EnergySlide

gas pricing8
GAS PRICING
  • “Why should people in Europe suffer for the price of my gas because of what’s happening in Venezuela ?”
  • Egyptian Oil Minister, Mr. Sameh Fahmy, February 2003.
  • Proposing new gas price-fixing formula, ending link between gas prices and crude oil prices.

Peter Ross, Wimbledon EnergySlide

the next big success story
The next big success story

Our Indian hosts?

Peter Ross, Wimbledon EnergySlide

the end
THE END

Peter Ross, Wimbledon EnergySlide

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