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LNG market outlook Time to get liquid
October 2012
Please refer to important disclosures at the end of this document
Sigurd-Erik Nissen-Meyer Direct: +47 2413 2134 Mobile: +47 9186 6247
Email: [email protected]
Per Kristian Reppe Direct: +47 2413 2187
Mobile: +47 90 03 32 03 Email: [email protected]
2
Summary
LNG demand: Should grow 5-7% on average p.a. through 2025
Gas demand shows solid growth
Gas is cheap, clean, plentiful and has ample upside through substitution
LNG should be increasingly important to bring the gas to the end-user markets
Liquefaction: Capacity is set for growth. LNG prices support FIDs
Regasification: Solid pipeline of regasification projects. In the FSRU market, there is potential for 6-8 contract awards next 12 months, and 30+ by 2015
Shipping: Looks to be the bottleneck in 2012-2013. All set for windfall returns ahead
3
The outlook for gas and LNG demand is strong
Strong growth in LNG demand is underpinned by solid growth in gas, of which an increasing share is met by LNG
Gas is cheap, clean, plentiful and has ample upside through substitution
Source: BP; Wood Mackenzie; Exxon; IEA; EIA; Pareto
World annual demand growth in 2010 – 2030 by energy source
6.0%
1.9%
1.0% 0.9%
2.2%
0%
1%
2%
3%
4%
5%
6%
7%
LNG Gas Coal Oil Nuclear
World demand CAGR 2010 - 2030
4
LNG takes a larger share of the gas market
Key drivers for more LNG:
Cost efficient transport
Diversification for consumers
Flexibility for producers
Cheap source of gas supply
Source: BP; IEA; EIA; Wood Mackenzie; Pareto
World LNG and gas demand 2000 – 2030e
6%
9%
14%
19%
0%
5%
10%
15%
20%
25%
0
1,000
2,000
3,000
4,000
5,000
2000 2010 2020e 2030e
World gas demand World LNG demand LNG share of total
World demand, bcm/year LNG share of total
5
More LNG capacity is needed to bring the gas to the end-users
Source: BP; Company data; EIA; IEA; Pareto
Change in gas imports/exports, and new LNG capacity between major regions 2010 – 2035e
160
5
500
250
230
200
Europe Eurasia
Asia ME
N. Am
Africa
120
Australia
Imports
Exports
New LNG capacity
All figures are in bcm/year
6
Regional price differentials and hence arbitrage opportunities is the catalyst for new capacity
Source: Bloomberg; IEA; Wood Mackenzie; Pareto
Global gas prices/costs
6
USD 17
Gas price/cost (USD/mmbtu)
New LNG capacity
USD 3
USD 9
USD 0-6
USD 0-6
USD 4-6
USD 2-8
Price differentials imply strong economics for LNG projects
10 12 12 13 14 15 17 17 1821 23
26
55
0
5
10
15
20
25
30
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '11 +prop.
Number of LNG importing countries
7
The number of LNG importing countries increases rapidly
Source: BP; TRI-ZEN; Teekay; Wood Mackenzie; Höegh LNG; Pareto
Number of LNG importing countries
2000 – 2011: +160%
114
68
51
92
51
17
0
20
40
60
80
100
120
Oil Coal* Nuclear* Gas, Japan Gas, EU Gas, US
USD/boe
8
Gas is relatively cheap
*Takes capex, opex (OECD level) and efficiency of coal, nuclear and gas power plants into account. Assumes carbon cost of USD 20/ton Source: Bloomberg; IEA; Pareto
Energy prices in USD per barrel of oil equivalent, adjusted for energy efficiency
9
Gas is clean and plentiful
CO2 emissions from gas power are half the level of coal power
Gas resources amount to more than 250 years at current production level
*Conventional and unconventional Source: IEA; Pareto
Power plant CO2 emissions Amount of recoverable resources: Oil vs. gas
254
180
0
50
100
150
200
250
300
Gas Oil
Recoverable resources* (Years of 2010 production)
330
715
0
100
200
300
400
500
600
700
800
Gas power plants Coal power plants
CO2 emissions from new power plants (kg/MWh)
0
2,000
4,000
6,000
8,000
10,000
Gas demand 2011 Gas demand 2011 + Powergen. substitution
Gas demand 2011 + Powergen. + Transport substitution
bcm
10
There is ample upside to gas demand through oil, coal and nuclear substitution
*100% substitution from oil, coal and nuclear to gas in power generation and 100% from oil to gas in transportation Source: Exxon; IEA; Pareto
World gas demand 2011 and upside through substitution*
6,400 bcm +98%
8,970 bcm +178%
3,223 bcm
Global LNG demand 2011: 331 bcm
11 Source: BP; Bloomberg; Pareto 11
To sum it up: Gas appears to be a key solution to the energy crisis
Oil Record low spare production capacity. Oil prices set global economic
growth at risk
Coal Dirty and not cheap anymore. Coal prices are 100-300% higher than
2001-2005 average
Nuclear Controversial following the disaster in Japan
Renewables Expensive and weather dependent
Gas Cheap, clean, plentiful. Ample substitution opportunities towards gas
Characteristics and trends
0
100
200
300
400
500
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Oil demand Gas demand
Chinese oil and gas demand (bcm/year)
12
In 2000-2010, China was a game changer for oil
In 2000–2010, Chinese oil demand
climbed from 264 bcm to 500 bcm
accounted for 40% of global growth
exceeded consensus forecast by 50-100%
Chinese gas demand posted solid growth, but nowhere near the levels seen for oil
Source: BP; Pareto
Chinese oil and gas demand 1965 – 2010
0
100
200
300
400
500
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Oil demand Gas demand
Chinese oil and gas demand (bcm/year)
13
In 2011-2020, China can spur a similar growth in gas demand
Chinese gas demand could climb from 109 bcm in 2010 to 400 bcm in 2020
Rapid growth is supported by
government targets to double the share of gas in total energy demand by 2015
import infrastructure; ~170 bcm is under construction or proposed
Source: BP; IEA; Pareto
Chinese oil and gas demand 1965 – 2020e
14
The LNG market should finally get exposure to Chinese growth
China has until recently been non-existent in the LNG market
China’s share of global LNG imports reached 5% in 2011 and should be set for rapid growth going forward, reaching ~12% by 2015
Chinese regas capacity increases >27% p.a. in 2012-2015
Source: EIA; BP; Pareto
China’s share of global LNG imports 2000 – 2015e
0 %
2 %
4 %
6 %
8 %
10 %
12 %
14 %
2000 2002 2004 2006 2008 2010 2012e 2014e
China's share of global LNG demand
15
Chinese LNG import capacity set to increase rapidly
Chinese regasification capacity should increase from ~21 bcm in 2011 to ~60 bcm in 2015, of which > 85% already is under construction
Based on proposed projects, import capacity could reach more than 100 bcm/year by 2020
Source: Interfax; IEA; Pareto
Chinese regasification capacity 2010, 2015e and proposed
21
60
0
20
40
60
80
100
2011 2015e 2015e + totalproposed
China LNG import capacity (bcm/year)
> 100
16
Gas penetration in China increases from a very low level
The Chinese government aims to increase the share of gas in total energy demand from 4% in 2010 to 8% in 2015 and 10% in 2020
There would still be plenty of upside compared with the world ex-China
A strong supply side supports increased gas use
Domestic production (shale)
LNG imports
Pipeline imports
Source: BP; IEA; Pareto
The share of gas in total energy demand
4%
8%10%
0%
5%
10%
15%
20%
25%
30%
2010 2015 target 2020 target
Gas share of total energy demand
China World ex-China 2010
World ex-China 2010: 29%
17
A substantial amount of LNG is needed to meet increasing Chinese gas demand
A sharp increase in LNG imports are needed, even if one assumes rapid growth in domestic production and pipeline imports
Assumptions
Demand and shale in line with government targets
Conventional production CAGR of 4.5%*
Pipeline imports: CACP (40 bcm) + Myanmar (13 bcm) + CACP exp. (20 bcm)
*ConocoPhillips/Wood Mackenzie estimates Source: BP; IEA; ConocoPhillips; Pareto
Chinese gas demand and supply by source 2010, 2015e and 2020e
97135 150
7
8046
97
63
73
0
50
100
150
200
250
300
350
400
450
2010 2015e 2020e
Chinese gas demand and supply by source (bcm)
Pipeline imports LNG imports Shale prod. Conventional prod.
109
250
400
18
What do E&P companies say about shale gas outside of US?
Chevron (exploring for shale in China, Poland, Bulgaria, Romania and Ukraine)
The speed at what people speculate shale gas will be coming to market is too fast
There is a huge difference between the US and the rest of the world:
There have been millions of wells drilled in the US
You know a lot more about the actual geology
No other place in the world that has such a well-developed gas infrastructure
CNPC, China’s largest gas producer
Compared with North America, China’s shale gas resources involve more complicated geological features. “The geological conditions are very different from North America”, CNPC geologist
Water scarcity is a challenge. CNPC pursues reduced-water and no-water fracturing technologies
CNPC says it is unable to meet the government’s shale gas targets. The company targets 1 bcm of shale gas production in 2015, compared with 2.5 bcm proposed by the government
Source: Interfax; Argus; Rigzone; Pareto
19
Japanese LNG imports should increase further in 2012 due to nuclear outages
The lost nuclear power equals
17 bcm in 2011
32 bcm in 2012 (IEA base case)
38 bcm in 2012 (no restart)
Growth y/y in LNG imports, assuming 60-65% of the nuclear loss is met by LNG
2011: 11 bcm (12%)
2012: 8-12 bcm (8-11%)
Source: IEA; Pareto
Japanese power generation scenarios April 2011 – December 2012
0
5
10
15
20
25
Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12
Japanese nuclear power generation (TWh)
Normal No restart IEA base case
20
Indian LNG needs should increase more than expected as domestic gas production disappoints
Gas production at India’s KG-D6 field is disappointing due to pressure drop and high water ingress
Current output is 11 bcm/yr, down from a high of 22 bcm/yr (in 2010) and well below the 29 bcm/yr targeted by 2012
Production may dip below 8 bcm/yr in 2013-2014
2P reserve estimate cut from more than 300 bcm (2006) to 55 bcm now
This is positive for LNG imports
LNG imports increased 41% to 17 bcm in 2011 and should be set for another sharp increase in 2012. The current KG-D6 shortfall equals ~100% of LNG imports
Regas capacity increases to 25+ bcm/yr by YE’12 and to 60+ bcm/yr by 2015/2016 based on proposed projects
Supports construction of additional regas capacity and new LNG supply contracts
Source: Interfax; The Times of India; BP; EIA; Pareto
KG-D6 production overview
Indian gas supply and demand 2010
Demand bcm/year 62
Domestic production " 51
of which KG-D6 " 20
LNG imports " 12
KG-D6 is key for Indian gas supply
KG-D6 production (started in April 2009)
2010 production bcm/year 20
June 2012 production " 11
March 2013 guiding " 10
2013-2014 guiding " 8
2012 origina l target " 29
*Output may dip below this level in 2013-2014 according to
Reliance
21
Liquefaction capacity should be set for growth
Projects under construction increases supply 4.6% p.a. through 2017
Proposed projects underpin further solid growth from 2015-2016
Even if 50% is cancelled, the rest is delayed by 3 years and no additional projects come on-stream, global LNG supply would increase by 6% p.a. on avg through 2024
*Not conclusive Source: IEA; Clarksons; Poten; Wood Mackenzie; Pareto
LNG liquefaction capacity outlook
331
134
566
1,030
0
200
400
600
800
1,000
1,200
Supply 2011 Under construction Proposed*(Pre-FID)
Total
LNG liquefaction capacity (bcm/year)
2
4
6
8
10
12
14
16
18
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12
Japan LNG average price
USD/mmbtu
22
LNG prices support Final Investment Decisions (FIDs)
Source: Bloomberg; Wood Mackenzie; Pareto
Asian LNG prices 2000 – 2012 vs. Breakeven for new liquefaction projects
Breakeven for new liquefaction projects
Spot LNG in Asia has been in the USD 13-18/mmbtu range since Jun-11
23
2011 was a great year for liquefaction FIDs. More should be underway in 2012-2013
In 2011, five projects took FID: Donggi-Senoro, Gladstone, Prelude, AP LNG, and Wheatstone. Total capacity of 36 bcm/year
In 2012, Ichthys, AP LNG T2 and Cheniere have taken FID and there should be more underway over the next 18 months
Source: Company data; IEA; Pareto
Amount of liquefaction capacity taking FID 2007 – 2012 YTD
6
19
6
29
12
36
31
0
5
10
15
20
25
30
35
40
2006 2007 2008 2009 2010 2011 2012YTD
FIDtarget
'12-'13
Liquefaction capacity taking FID (bcm/year)> 160
24
Cheniere with FID on Sabine Pass - could require ~28 vessels
Construction of the phase 1 (first two trains) started in August 2012. First LNG expected in 2015
FID on phase 2 targeted in 2013. The project in total will up to 30 vessels shipping cargoes into Asia and Europe
*160,000 CBM Source: Cheniere Energy; Platts; Pareto
Overview of Sabine Pass liquefaction project in Louisiana, US (Cheniere Energy)
Sabine Pass (Cheniere Energy)
Phase 1 Phase 2 Total
Capacity bcm/year 12.2 12.2 24.5
Definitive commercial agreements " 10.5 11.3 21.8 - BG " 5.7 1.8 7.5
- Gas Natural Fenosa (Spain) " 4.8 - 4.8
- GAIL (India) " - 4.8 4.8
- KOGAS (Korea) " - 4.8 4.8
Spot/Flexible " 1.7 0.9 2.6
Start-up target Year 2015-2016 2017-2018 2015-2018
FID target " 2012 2012-2013 -
Shipping demand (Pareto est.) # of vessels* 12 16 28
25
Increasing interest in US LNG
Cheniere has started construction
Mitsui, Mitsubishi and GDF Suez have agreed to buy 16 bcm/yr from Cameron (not-final). Targets construction start late 2013, with first LNG late 2016
Chubu Electric Power and Osaka Gas signed agreements to buy 6 bcm/year combined from Freeport
*Cheniere shipping demand is based on the signed sales contracts. For the other projects, Asia is assumed as the destination (using the Panama canal). 160,000 CBM vessel size **The agreements with Mitsubishi, Mitsui and GDF Suez bind the parties to fund all development expenses, including design, permitting and engineering, as well as to negotiate 20-year tolling agreements Source: Company data; Platts; IEA; Bloomberg; Pareto
US liquefaction projects (not conclusive)
Project Location Capacity Ship demand* Comment
(bcm/year) (# of vessels)
Freeport Texas 18 25
Cameron LNG Louisiana 16 23 Agreements with Mitsui, Mitsubishi and GDF Suez**
Dominion Cove Point Maryland 11 19
Cheniere Energy Louisiana 24 28 Construction expected to start in 2012
Other proposed projects
Lake Charles Louisiana 21 29
Jordan Cove Energy Oregon 8 5
Corpus Christi Texas 18 26
Lavaca Bay LNG (FLNG) US GoM 4 6
Total 121 161
26
Increasing interest in US LNG II
North American LNG projects overview
US firm State bcm/y mtons/a Start Filed DOE
Sabine Pass T 1&2 US, Louisiana 12.2 9.0 2015-2016 Approved
US proposed State bcm/y mtons/a Start Filed DOE
Sabine Pass T 3&4 US, Louisiana 12.2 9.0 2017-2018 Aug-10
Freeport US, Texas 18.0 13.2 2015+ Dec-10
Lake Charles (Trunkline LNG) US, Louisiana 20.7 15.2 2015+ May-11
Cameron LNG US, Louisiana 16.3 12.0 Late 2016 Nov-11
Jordan Cove Energy US, Oregon 8.2 6.0 2018+ Sep-11
Dominion Cove Point US, Maryland 10.6 7.8 2018+ Sep-11
Corpus Christi US, Texas 18.4 13.5 2017+ FERC Dec-12
Southern LNG (Elba Island) US, Georgia 5.4 4.0 2020 May-12
Golden Pass US, Texas 21.2 15.6 2018 Aug-12
Warrenton LNG US, Oregon 12.2 9.0 2018+ May-12
Gulf Coast LNG US, Texas 28.9 21.3 2018+ Dec-11
Pascagoula US, Mississippi 15.0 11.0 2018+ May-12
Lavaca Bay LNG (FLNG) US GoM 4.1 3.0 2017+ May-12
Total US - 191.2 140.6
Canada proposed State bcm/y mtons/a Start
Kitimat T1 Canada 6.8 5.0 2015+
BC LNG T1 Canada 1.2 0.9 2013-2014
BC LNG T2 Canada 1.2 0.9 2016-2018
Progress LNG 1 Canada 5.0 3.7 2016+
Progress LNG 2 Canada 5.0 3.7 2020
Canada LNG, T1-2 Canada 16.3 12.0 2019
Canada LNG, T3-4 Canada 16.3 12.0 2020++
Total Canada - 51.9 38.2
North American LNG projects overview
27
North American liquefaction projects – a potential game changer
Dominion Cove Point
Lake Charles
Cameron LNG
Jordan Cove Energy
Freeport
Sabine Pass
Corpus Christi
In total, we see 17 potential US liquefaction projects
Start-up beyond 2015
Most of the US liquefaction projects are located in the Gulf
Given that a majority of the volumes are likely to be shipped into Asia, the US projects are very ton-mile intensive
Not conclusive
Progress LNG
Southern LNG Golden Pass
Lavaca Bay
Kitimat / BC LNG /
Canada LNG
28
US LNG and export permissions
A main obstacle for the projects is obtaining export permission to countries with which the US does not have a free trade agreement (FTA)
The exception is Cheniere which already has received a non-FTA export permission for 22 bcm/year
Non-FTA export permission is key as, except South Korea, none of the current FTA countries are large LNG importers
In the near term, the US Department of Energy (DoE) has suspended approval of new non-FTA export permissions as the potential impacts of US LNG exports is assessed
A report investigating the impact on the US economy expected to be finished by YE’12 is important
No decision likely before 2013
It should be noted that EIA in January published a report on the “Effect of Increased Natural Gas Exports on Domestic Energy Markets”.
The report was requested by DoE as one input to their assessment of the impact of LNG exports
The report estimated that LNG exports would have a fairly low impact on the US gas price *
*In the reference scenario with no LNG exports, the Henry Hub price was estimated to average USD 5.2/mmbtu in 2015-2025. In a scenario where LNG exports increase gradually from zero in 2014 to 61 bcm in 2020 and remains at 61 bcm thereafter, the Henry Hub price would average USD 5.7/mmbtu in 2015-2025 Source: EIA; Interfax; Pareto
29
Liquefaction projects pre-FID
Source: Company data; IEA; Pareto
Project Country Capacity (bcm/yr) Start up Project Country Capacity (bcm/yr) Start up
Angola LNG Tra in 2 Angola 7.1 2015+ Mozambique LNG (ENI) Mozambique 10.0 2020
Pluto T2 Austra l ia 6.8 2016 Brass LNG Nigeria 6.8 2016
Pluto T3 Austra l ia 6.8 2018 Olokola LNG Nigeria 15.0 2018+
Newcastle LNG Austra l ia 1.4 2015 NLNG Tra in 7 Nigeria 11.4 2018+
Browse Austra l ia 16.3 2017+ Snøhvit T2 Norway 5.6 2018+
Arrow Austra l ia 10.8 2016+ Gulf LNG (FLNG) PNG 2.7 2015+
Sunrise (FLNG) Austra l ia/Timor 5.4 2016+ PNG LNG Tra in 3&4 PNG 9.0 2017+
Bonaparte FLNG Austra l ia 2.7 2018 PNG FLNG PNG 4.1 2016
Gorgon T4 Austra l ia 6.8 2017+ Shtokman Russ ia 10.2 2020+
Wheatstone T3-4 Austra l ia 13.6 2018+ Sakhal in II T3 Russ ia 6.5 2015+
Qld Tra in 3 Austra l ia 5.8 2017+ Sakhal in I Russ ia 7.5 2015+
PTTEP Floater (FLNG) Austra l ia 3.4 2017 Sakhal in II I Russ ia 7.5 2015+
Santos FLNG Brazi l 3.7 Delayed Vladivostok LNG Russ ia 13.6 2017+
Kribi LNG Cameroon 4.8 2017+ Yamal LNG Russ ia 20.4 2017+
Kitimat T1 Canada 6.8 2015+ Pechora Russ ia 3.5 2020+
BC LNG T1 Canada 1.2 2013-2014 Tanzania LNG Tanzania 10.0 2018+
BC LNG T2 Canada 1.2 2016-2018 Sabine Pass T 3&4 US, Louis iana 12.2 2017-2018
Progress LNG 1 Canada 5.0 2016+ Freeport US, Texas 18.0 2015+
Progress LNG 2 Canada 5.0 2020 Lake Charles (Trunkl ine LNG)US, Louis iana 20.7 2015+
Canada LNG, T1-2 Canada 16.3 2019 Cameron LNG US, Louis iana 16.3 Late 2016
Canada LNG, T3-4 Canada 16.3 2020++ Jordan Cove Energy US, Oregon 8.2 2018+
EG LNG Tra in 2 Equatoria l Guinea 6.0 2016+ Dominion Cove Point US, Maryland 10.6 2018+
Tangguh T3 Indones ia 5.2 2014+ Corpus Chris ti US, Texas 18.4 2017+
Masela Tra in 1 (Abadi LNG, FLNG)Indones ia 3.4 2018+ Alaska LNG US, Alaska 20.4 2020
Masela Tra in 2 Indones ia 2.7 2018+ Southern LNG (Elba Is land)US, Georgia 5.4 2020
Mahakam (Bonatang) Indones ia NA 2017+ Lavaca Bay LNG (FLNG) US GoM 4.1 2017+
Iraq LNG Iraq 5.4 2017-2018 Delta Caribe Oriental 1 Venezuela 6.4 2015+
Israel LNG (Tamar) Is rael 2.7 2018+ Delta Caribe Oriental 2 Venezuela 6.4 2015+
Petronas LNG Tra in 9 Malays ia 4.9 Q4'15 Delta Caribe Oriental 3 Venezuela 6.4 2015+
Mozambique LNG (APC) Mozambique 13.6 2018+ Total proposed 565.8
Liquefaction projects pre-FID Liquefaction projects pre-FID
30
Liquefaction projects in ramp up or under construction
Source: Company data; IEA; Pareto
Project Country Capacity (bcm/yr) Start up
Pluto Tra in 1 Austra l ia 5.8 Mar-12
Wheatstone Austra l ia 12.1 2016
Angola LNG Angola 7.1 Q2'12
Arzew Algeria 6.4 2014
Skikda replacement Algeria 6.1 2014
PNG LNG Tra in 1&2 PNG 9.0 2014
Qld Tra in 1-2 Austra l ia 11.6 2014
Gladstone LNG Austra l ia 10.6 2015
Donggi -Senoro Indones ia 2.7 2014
Gorgon T1 Austra l ia 6.8 2014
Gorgon T2 Austra l ia 6.8 2015
Gorgon T3 Austra l ia 6.8 2016
Prelude (FLNG) Austra l ia 4.8 2016
AP LNG T1 Austra l ia 6.1 2015
Ichthys Austra l ia 11.4 2017
AP LNG T2 Austra l ia 6.1 2016
Sabine Pass T 1&2 US, Louis iana 12.2 2015-2016
Petronas FLNG Malays ia 1.4 2015
Total 133.8
Liquefaction projects under ramp up/construction
LNG shipping and FSRU outlook Approaching peak winter season
October 2012
Please refer to important disclosures at the end of this document
Per Kristian Reppe Direct: +47 2413 2187
Email: [email protected]
Jonas Kraft Direct: +47 2413 2188
Email: [email protected]
32
Recent newsflow and comments
Very few orders placed
Highlights
14 LNG carriers ordered YTD
Very slow order intake for yards in Q2, only 3 orders placed (Brunei Gas Carriers / MOL)
Financing is an issue: speculative players have increasingly difficulty getting financing for growth
Orderbook vs. incremental demand
Spot rates negatively affected recently
Spot rates have been negatively impacted by seasonality and more available tonnage in July
The Angola liquefaction plant continues to be delayed; now expected in operation in early Q4
About ~10 vessels have entered the spot market on short term employment / no employment
Expect a pick-up in rates into Q4
The summer months are usually a slow period in terms of shipments of LNG cargo
Charterers likely to soon start positioning ahead of the winter season
Expect to see rates picking up in Q4 with more spot volumes being demanded in Asia
2011: Rates moved from USD 100,000 per day in October to USD 150,000 in December
Top picks / rec.
We believe the winter market looks increasingly tight this year
Buy the players with spot exposure: Golar LNG and Awilco LNG
Buy Höegh LNG on new FSRU awards
Total orderbook now stands at 77 units or 22% of existing fleet
Liquefaction capacity out of US included in estimates: Cheniere with FID on Sabine Pass T 1-2
New liquefaction capacity exceeds current orderbook, but 2014/2015 still likely to see lower rates
Overview of the LNG value chain
LNG value chain 101:
Natural gas in its original form is cooled down to liquid form at dedicated plants
The liquefied gas is then shipped to its destination, converted to gas again and distributed to the consumer
Source: Pareto
LNG value chain
33
Production Liquefaction Regasification Offtake
Onshore
Offshore
Liquefaction Plant
Regas Terminal Power Plant
LNG FPSO FSRU Gas-To-Wire LNGC Platform/ Installation
Shipping
34
Summary
More hardware is needed to meet the growing demand for LNG!
Undersupply of ships in 2012-13, utilization above 90% in 2014-15 if all options gets exercised, hence rates will continue to increase short to medium term
Demand for up to 180-370 new vessels by 2020, subject to liquefaction FID’s
The number of LNG importing countries will double by 2015, hence demand for Floating Storage and Regasification units will continue to grow at a strong pace
Main driver and main risk to both shipping and FSRU demand is liquefaction capacity
Source: Pareto Securities
35
LNG fleet growth rising through 2014
*Source: Pareto Securities, World Yards, Clarksons
LNG fleet growth, y/y (mcbm) and number of vessels
Growth rate accelerated from 2003 until 2010 with 197 net deliveries.
Supply growth exceed demand growth every year
On the back of turmoil in financial markets and lack of financing the growth rate declined significantly in 2010 and 2011.
Few, if any, available slots for 2014. Hence, it is not possible to add any incremental supply before 2015
Engines seems to be the bottleneck
0%
5%
10%
15%
20%
25%
0
50
100
150
200
250
300
350
400
450
500
2001 2003 2005 2007 2009 2011 2013 2015
Number of vessels Y/Y growth CBM
# vessels Y/Y fleet growth
36
Firm vessels in the orderbook represent 22% of the existing fleet
*Source: Pareto Securities, World Yards, Clarksons
LNG fleet growth, y/y (mcbm) and number of vessels
355 367 369 390 422 441 444
11.3%
4.8%
1.7%
3.3%
7.5% 6.9%
2.8%
0%
2%
4%
6%
8%
10%
12%
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015 2016
Number of vessels Y/Y growth CBM
# vessels y/y fleet growth
Current LNG fleet stands at 368 units (above 3,000 dwt)
The orderbook comprises 77 firm vessels (11.9m cbm) ex. 6 FSRU
In addition, we estimate that there is about 26 options outstanding, but difficult to be exact
Orderbook including options at 29.8% of the current fleet (mcbm)
37
Fleet growth is however low compared to the historical levels
Current firm orderbook points to a fleet growth CAGR of 5.1% in the period from 2011 to 2015
In comparison, fleet growth averaged 13.3% and 14.2% in the period 2001-11 and 2005-11, respectively
*Source: Pareto Securities, World Yards, Clarksons
Historical fleet growth vs. current orderbook
13.3%14.2%
5.1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
CAGR 2001-11 CAGR 2005-11 CAGR 2011-15
Fleet growth (excluding options)
Fleet growth %
38
New orders will be placed for 2015 deliveries
*Source: Pareto Securities, Clarksons, World Yards
LNG deliveries and yard capacity
1015
20 1927
32
4638
1812
11
21
32
19
3
26
42
0
5
10
15
20
25
30
35
40
45
50
Deliveries Orderbook Options Excess capacity
# vessels Current orderbook counts 77 vessels, or roughly 22% of the total fleet (cbm)
About 40% will be delivered in 2014, next open slots are for 2015 deliveries
Delivery capacity is about 45 vessels per annum, of which the top-end Korean yards hold a 80% market share
About 50% of the orderbook already fixed to E&P players
Gazprom
BG Group
Shell
Woodside
Chevron
Brunei / Exxon / Osaka Gas / PNG
39
Very few orders placed YTD
*Source: Pareto Securities, Clarksons
LNG vessel orders placed by year
710
15
20 21 2015
70
48
36
26
50
7
52
15
0
10
20
30
40
50
60
70
80
1996 1998 2000 2002 2004 2006 2008 2010 2012
# orders
2011 was a big year for LNG vessel orders with 52 places after only 12 orders between 2008-10
2012 YTD 15 LNG carriers have been ordered at Korean and Japanese yards
High activity in Q1
Virtually no activity in Q2, stand still among the speculative players (Brunei and MOL placing 3 orders for back-to-back projects)
Financing is an issue: speculative players have increasingly difficultly getting the necessary equity/debt financing
40
Undersupply of vessels already back in 2011
Source: Pareto Securities, Fearnleys LNG
Vessel availability spot market and LNG rates
0
20
40
60
80
100
120
140
0
5
10
15
20
25
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
LNG carrier availability
Available vessels (lhs) LNG spot rate
Vessel availability in the spot market has been very tight over the last one and a half year
This correlates well with the rally we have seen in rates
Average availability was below 3 over 2011 in the spot market
Industry players talk about 5 – 15 vessels in deficit in 2011
41
Shipping: very tight market balance in 2012-13
Source: Pareto Securities, IEA, World Yards
LNG vessel surplus / deficit*
-10-12
-8
15
2622
2
-6 -5 -4
-20
-10
0
10
20
30
40
2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
# of vessels
We estimate that the market was in deficit with 10 vessels in 2011
We expect the market to remain undersupplied in both 2012 and 2013, but slightly softer in 2014 through 2016
Fleet utilization likely to stay above 90% in 2014-16 based on current orderbook and unexercised options which points to a continued good market ahead
*Our surplus / deficit calculations takes into account the existing orderbook, a declining ton mile effect from new Australian projects as well as a decline in existing production
42
Solid upside in shipping demand from new liquefaction projects
Source: Pareto Securities, IEA, World Yards
LNG vessel orderbook versus liquefaction capacity additions
*net of a 4% decline in existing capacity. Assumes 92% capacity utilization
Current LNG vessel orderbook constitutes 22% of the current fleet and 29% including options
According to our data, growth in liquefaction capacity from projects under construction plus ramp-up is at 32%, higher than the fleet orderbook
Adding liquefaction projects with FID in 2012-13 we see demand increasing with another 50%
Adding all liquefaction projects which have currently been proposed, would add another 87% to the LNG vessel volume demand
25%
7%32%
50%
107%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Supply (Orderbook) Demand (Liquefaction capacity*)
Orderbook relative to 2011 level
Liquefaction capacity: Additional proposed Liquefaction capacity: FID target 2012-2013
Liquefaction capacity: Under cons./Ramp up Orderbook: Options
Orderbook: Firm
43
More liquefaction FID’s points to increased vessel demand
Source: Pareto Securities, IEA, World Yards
LNG vessel surplus / deficit
-58-81
-138
-211-250
-200
-150
-100
-50
0
50
2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
# of vessels
Capacity under construction + 50% of proposed
While investment decisions for liquefaction plants up until 2016 have already been set, we believe more capacity has to be added in order to avoid shortage of LNG
Assuming that 50% of the liquefaction projects currently planned gets FID, we see a total need for another 211 new vessel by 2020
44
High case: we could see demand for 365 new orders by 2020
Source: Pareto Securities, IEA, World Yards
LNG vessel surplus / deficit
-58-81
-138
-211
-117-156
-270
-418-450
-400
-350
-300
-250
-200
-150
-100
-50
0
50
2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
# of vessels
Capacity under construction + 50% of proposed + 100% of proposed
If we assume that all liquefaction projects on our list get FID, we see demand for an additional 418 vessels by 2020
However, it is not likely that all projects get FID due to current financial environment and funding risk
On the other hand, almost all projects last year got FID despite the turmoil in the second half of 2011
New projects which are not included in our project list are also likely to surface
45
Market balance summary
*Assumes 92% utilization of liquefaction capacity. Demand from projects under construction takes ton-mile effects into account. Demand from proposed projects assumes 1 vessel per 1 bcm/year Source: BP; IEA; Poten; Wood Mackenzie; Golar; Pareto
LNG trade and shipping market balance 2011 – 2020e
Projects under construction
LNG trade and shipping balance 2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
LNG trade* bcm/year 331 339 344 348 377 402 434 446 445 444
Increase from 2011 bcm/year 8 13 17 47 71 103 115 115 113
Ship demand* # of vessels 371 380 388 391 406 420 442 450 449 448
Fleet (current orderbook) " 361 368 380 406 432 443 444 444 444 444
Ship surplus/defici t " -10 -12 -8 15 26 22 2 -6 -5 -4
Fleet uti l i zation ex.options 103% 104% 102% 96% 94% 95% 100% 101% 101% 101%
Fleet uti l i zation inc. options 103% 104% 102% 96% 91% 89% 94% 95% 95% 95%
Projects under construction and 50% of proposed capacity
LNG trade and shipping balance 2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
LNG trade* bcm/year 331 339 344 348 378 413 493 520 578 651
Increase from 2011 bcm/year 8 13 17 47 82 163 190 247 320
Ship demand* # of vessels 371 380 388 391 407 431 502 525 582 655
Fleet (current orderbook) " 361 368 380 406 432 443 444 444 444 444
Ship surplus/defici t " -10 -12 -8 15 25 12 -58 -81 -138 -211
Fleet uti l i zation 103% 104% 102% 96% 94% 97% 114% 120% 134% 151%
Fleet uti l i zation inc. options 103% 104% 102% 96% 91% 91% 107% 112% 126% 142%
Projects under construction and 100% of proposed capacity
LNG trade and shipping balance 2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
LNG trade* bcm/year 331 339 344 348 379 423 553 595 711 858
Increase from 2011 bcm/year 8 13 17 48 92 222 264 380 528
Ship demand* # of vessels 371 380 388 391 408 441 561 600 714 862
Fleet (current orderbook) " 361 368 380 406 432 443 444 444 444 444
Ship surplus/defici t " -10 -12 -8 15 24 2 -117 -156 -270 -418
Fleet uti l i zation 103% 104% 102% 96% 94% 100% 128% 138% 166% 202%
Fleet uti l i zation inc. options 103% 104% 102% 96% 91% 94% 121% 130% 156% 190%
46
Fleet utilization will stay high
Source: Pareto Securities
LNG fleet utilization based on firm supply and demand
103% 104% 102%96%
94% 95%100% 101% 101% 101%
91% 89% 94% 95% 95% 95%80%
100%
120%
140%
160%
180%
200%
2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
Fleet util ization
Capacity under construction Incl options
Based on current liquefaction capacity under construction and fleet on order, capacity utilization stays above 94% through 2020
In shipping you have a good market if capacity utilization is above 90%
If capacity utilization is above 92-93% you have a booming market
47
Fleet utilization will stay high
Source: Pareto Securities
LNG fleet utilization (50%/100% of proposed capacity)
If 50% of all LNG liquefaction projects currently planned get FID, LNG fleet capacity utilization rises to a hypothetical 151%
If 100% of all LNG liquefaction projects currently planned get FID, LNG fleet capacity utilization rises to 202% given no new orders
Several liquefaction projects have FID in 2012 and 2013, which clearly illustrates that the need to build more LNG vessels to meet demand in the second half of the decade
104% 102% 96%94% 97%
114%
120%
134%
151%
128%138%
166%
202%
80%
100%
120%
140%
160%
180%
200%
2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e
Fleet util ization
Capacity under construction + 50% of proposed + 100% of proposed
48
Older tonnage likely to be phased out for scrapping and potentially conversions into FSRUs
Few vessels in lay-up; unlikely to re-enter the market
Over 40 vessels are older than 30 years:
This is 9% of the total market
Or approximately 29 newbuilds
The oldest 1st generation vessels are already starting to be scrapped
Over 30+ FSRU projects expected within 2015
Only 2 uncommitted FSRU newbuilds in the orderbook (but the players have options outstanding)
*Source: Pareto, World Yards
Age distribution LNG fleet
31 0 1 1 2
53
7 6 53
6
14 4
1 0 0 03 2 1 1
58
58
6 5 6
13
1
1014
2019
27
33
52
40
23
12
0
10
20
30
40
50
60
1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
LNG fleet - age distribution
Age distribution
Scrapping candidates
49
Few vessels in lay-up
Source: Pareto Securities
LNG vessels in lay-up
LNG vessels in layup
No Name Built Capacity (cbm) Owner Comment
1 Galeomma 1978 126,540 Shell Anchored
2 Tenaga Tiga 1981 130,000 Petronas Anchored
3 Tenaga Dua 1981 130,000 Petronas Anchored
4 LNG Palmaria 1969 41,000 Eni Very old, not likely to return
5 Koto (Kotowaka Maru) 1984 125,000 BW Gas Flooded engine room, severe damage
Only five vessels are currently in lay-up
Several older vessels have now returned to the market. Examples include among others Gimi, Hilli and Gandria to Golar
50
Who can meet demand?
*Source: Pareto Securities, Clarksons, World Yards
LNG orders by yard
24
15 18
5 5 6 4
2
1
3
0
5
10
15
20
25
30
Samsung Daewoo Hyundai Hudong Mitsubishi STX Kawasaki
LNG firm FSRU firm
# vessels
The three top end yards in Korea (Samsung, Daewoo and Hyundai) have the highest number of vessels on order
China will eventually build, but currently only has one shipyard (Hudong) with vessels on order
However, the technology aspects limits significant supply expansion. Moreover, the high capex commitment limits speculative orders to a large extent
51
LNG trade is driven by liquefaction capacity and not GDP growth
The driver for growth in LNG trade is new liquefaction capacity and not GDP growth
As an example, LNG trade increased 7.2% in 2009 despite a 0.6% decline in world GDP
Source: IMF; BP; Pareto
World GDP growth vs. World LNG trade growth 2001 – 2011
4.4% 4.9%
12.6%
5.4% 6.1%
11.8%
7.3%
0.0%
7.2%
22.6%
9.6%
-5%
0%
5%
10%
15%
20%
25%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
World GDP and LNG trade growth y/y
World LNG trade growth y/y World GDP growth y/y
52
A spot market is evolving
Source: Pareto Securities
Short term versus long term LNG shipping contracts
130 132 139 153 158 165 178 182 187 203241 248
11 1116 20 24
34 45 4040
5684
0
50
100
150
200
250
300
350
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Long term contracts Spot and short term trade (incl. contracts < 4 yrs)
Global LNG trade (bcm)
A concern in LNG shipping is that building liquefaction is so expensive that vessel order will be placed back to back with large projects
While this is true, we have also seen a trend of increasing short term volumes
Whereas short term contracts under four years accounted for only 5% of the volumes in 2000, this had risen to 29% in 2011
An increasing number of regas terminals will also lead to a more liquid market
53
What is left on the table to cover TC cost and profit?
Source: Pareto Securities, Platts
Cost calculation, LNG cargo Middle East to Europe
10.0
1.0 1.0
0.5 0.8
6.7
3.0
3.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
USD/mmbtu
The example to the left illustrates the cost structure of shipping LNG from the Middle East to Europe
The gas is sold at USD 10/mmbtu
Cash cost to lift the cargo is USD 6.7/mmbtu. Including capex cost of liquefaction ,we estimate profits of USD 3.7/mmbtu ex. TC cost for the cargo owner
54
What is left on the table to cover TC cost and profit?
Source: Pareto Securities, Platts
Cost calculation, LNG cargo Middle East to Japan
15.0
1.0 1.0
0.5 1.0
11.5
3.0
8.5
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
USD/mmbtu
The same exercise can be made with cargoes moved from the Middle East to Japan
Selling the cargo at USD 15/mmbtu, there is USD 8.5/mmbtu on the table to cover profit for the cargo owner plus TC cost and profit for the shipowner
55
Upside potential in rates
Source: Pareto Securities, Platts
Profit left to cover profit for cargo owner
313
763
0
150
300
450
600
750
900
USDk/day
USD 3.7/mmbtu on a Middle East to Europe cargo equates to USD 313k/day on a roundtrip basis
USD 8.5/mmbtu on a Middle East to Japan cargo equates to USD 763k/day on a roundtrip basis
While TC rates will not increase to these levels as cargo owners need profits, we believe the levels say something about the upside potential on rates in a tight shipping market
56
Upside potential in rates
Source: Pareto Securities, Platts
Profit left to cover profit for cargo owner
The same exercise can be done on other important LNG cargo routes
With current spot TC rates at USD 127k/day, there should be plenty of upside on rates going forward before we enter a scenario with rates destructing demand
Also keep in mind that traders could utilize the arbitrage opportunities in the market itself as long as there is upside on rates from current spot
313,000
763,000
218,000
607,000
336,000
127,0000
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
USD/day
57
Returns have never been higher
Source: Pareto Securities
Capex/EBITDA (yrs) – 1yr contract
Returns are currently on all-time high in the LNG shipping space
Capex/EBITDA on a downward trajectory since mid-2010 driven by higher rates while newbuild prices have stayed flat
EBITDA 3yr charter in LNG shipping puts the CAPEX/EBITDA payback at 4.5 years, the lowest observed in all major steel segments
180
200
220
240
260
280
300
0
5
10
15
20
25
30
35
Jan-06 Oct-06 Aug-07 Jun-08 Mar-09 Jan-10 Nov-10 Aug-11
Capex, USDmCAPEX/EBITDA
CAPEX/EBITDA (yrs) LNG newbuild prices
58
Recent drop in spot rates, expect a pick-up in Q4
Source: Pareto Securities, Fearnleys LNG
LNG spot and term rates 138-145,000 cbm
Spot rates have dropped in July on the back of:
Seasonality (less demand)
The Angola liquefaction plant continues to be delayed
More available tonnage: Gandria, Hilli, WilPower, 5 Angola vessels
Current spot rates USD 127k/d with 1yr TC at USD 148k/d
Expect a strong period ahead – no unfixed vessel deliveries, few vessels in lay-up and seasonal strength through inventory build-up ahead of the winter
148,000
127,000
140,000
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec
Spot rates 2011/12 1yr TC rate 2011/12 3 yr TC
USD/d
59
FSRU: A new concept
Source: HLNG, Pareto Securities
Shuttle and Regasification Vessel
An FSRU stands for a Floating Storage and Regasification terminal
A regasification terminal converts LNG into gas before it goes into a pipeline system
Terminals can be built both on- and offshore. The advantages with offshore solutions are:
A floating solution is cheaper than an onshore installation (50% est.)
Upfront capex is lower
“Not-in-my-backyard” problems are avoided
The unit can be moved if needed
Time to market is quick
60
Floating regas: the obvious solution
Source: Pareto Securities, BP
LNG trade and FSRU share of the market
World demand for gas is expected to rise significantly over the next 10-20 years and LNG share of the total volumes should continue to increase
In our view, floating regas solutions is the obvious solution to meet energy demand in a flexible and cost efficient way
Floating regas is expected to comprise 11% of the total LNG volumes in 2015
0% 1%3% 3%
5%
8%
11% 11%
0%
5%
10%
15%
20%
25%
30%
0
50
100
150
200
250
300
350
400
2008 2009 2010 2011e 2012e 2013e 2014e 2015e
LNG volumes ex FSRU FSRU volumes FSRU % of LNG
World demand, bcm/year FSRU share of total
61
Only three established players in the market
Source: Pareto Securities
Current FSRU fleet
The market comprises only three established players:
Excelerate Energy (8 vessels)
Höegh LNG (2 vessels)
Golar LNG (4 vessels)
15 vessels are currently in operation worldwide
Barriers of entry is high (technology, know-how, relationships, brand and capital)
Difficult for new players to enter into the market. Energy utilities seem to prefer established players
# Vessel Regas type Capacity Built Owner
1 GDF Suez Neptune Newbui ld - shuttle 145,130 2009 Lei f Hoegh/Mitsui OSK
2 GDF Suez Cape Ann Newbui ld - shuttle 145,130 2010 Lei f Hoegh/Mitsui OSK
3 Golar Spiri t Convers ion - s tatic 129,013 1981 Golar LNG
4 Golar Freeze Convers ion - fixed 125,800 1977 Golar LNG
5 Golar Winter Convers ion - s tatic 138,000 2004 Golar LNG
6 Khannur Convers ion - fixed 125,003 1977 Golar LNG
7 Excel lence Newbui ld - shuttle 138,120 2005 GFK/Excelerate
8 Excelerate Newbui ld - shuttle 138,074 2006 Exmar/Excelerate Energy
9 Excels ior Newbui ld - shuttle 138,060 2005 Exmar/Teekay/Excelerate
10 Explorer Newbui ld - shuttle 150,981 2008 Exmar/Excelerate Energy
11 Express Newbui ld - shuttle 150,900 2009 Exmar/Excelerate Energy
12 Exquis i te Newbui ld - shuttle 150,900 2009 Excelerate Energy
13 Expedient Newbui ld - shuttle 150,900 2010 Excelerate Energy
14 Exemplar Newbui ld - shuttle 150,900 2010 Excelerate Energy
15 FSRU Toscana Convers ion - fixed 137,000 2004 OLT Offshore LNG Toscana
62
Rapid expansion of FSRU projects worldwide
Source: HLNG, Pareto Securities
First FSRU came in operation in 2005 in the US (Gulf Gateway). The terminal was recently closed down due to low gas imports in the US
Since then we have seen a rapid expansion of new floating regas projects worldwide
Today there are 10 operational projects and 12 more under construction /awarded. Projects under construction are expected onstream by 2012 through 2015
All projects have secured an FSRU
Regasification projects
63
A solid pipeline of FSRU projects
Source: HLNG, Pareto Securities
Regasification projects
We count further 8 FSRU projects somewhere in pipeline to take FID, none have secured an FSRU yet:
1x Argentina (Enarsa)
1x Indonesia (Pertamina)
1x Uruguay (UTE/Ancap)
1x Bahrain (Bapco)
1x Bangladesh (PetroBangla)
1x Abu Dhabi (Government)
1x Lebanon (Government)
1x India (Petronet)
We see about 30-35 potential FSRU awards within 2015. Industry players talk about 30+ potential projects
64
The Central Java conversion project more firm
Source: Pareto Securities
Overview of LNG regas infrastructure in Indonesia
Earlier this year, PGN and Pertamina put the Central Java FSRU on hold due to the relocation of Höegh LNG’s first FSRU
According to HLNG, the Indonesian government has recently decided to continue the construction of the Central Java FSRU
This is a conversion project where HLNG and GLNG are shortlisted:
HLNG has offered the LNG Libra as a conversion candidate
HLNG - Original location for FSRU 1, Medan
HLNG - New location for FSRU 1, Lampung
GLNG - Nusantara Regas (Khannur) conversion, West Java
GLNG/HLNG – Central Java FSRU conversion (proposed)
65
HLNG selected as preferred bidder for the Colbun FSRU project
HLNG selected as preferred bidder
10+5 year
EBITDA USD 41m (vs. USD 50m exp)
Start-up late 2014
Valuation considerations
Capex to EBITDA 7.3x, slightly lower than 6.3x on the GasAtacama award to GLNG but clearly lower risk
Contract value USD 406m (NOK 7/sh)
NPV of contract value: USD 355m
Source: HLNG, Pareto
HLNG wins FSRU tender
66
Golar secures the long awaited GasAtacama FSRU contract
Source: Pareto Securities
FSRU location in the Bay of Mejillones, Chile
Recently Golar LNG was awarded the much awaited Gas Atacama contact in Chile
Duration 15 or 20 years in the charters option, plus 3x5 optional years starting Q4’15
EBITDA guided to USD 47/48m (dayrate USD 150,000), well above our USD 39m expectation (dayrate USD 125,000)
IRR to capital > 15% assuming USD 300m in capex
However, more risk as we see it considering that GasAtacama has not sources the gas yet and higher counterparty risk
67
FSRU economics going through the roof
Source: Pareto Securities
FSRU economics on selected contracts
We were impressed with the Lithuania contract awarded to Höegh LNG earlier this year
However, Golar’s Chile award sets a new benchmark in the space considering the length of the contract
EBITDA payback approaching six years on newbuilds with 35+ years of economic life and contract length in the range 15-20 years (ex. options)
IRR to capital > 15%
Typically IRR is between 12 – 15% on contract awards
FSRU economics GLNG Chile GLNG Khannur* HLNG Indonesia HLNG Lithuania HLNG Colbun
Type Newbuild Conversion Newbuild Newbuild Newbuild
Capex 300 210 325 325 300
EBITDA 47 43 40 50 41
Firm contract (yrs) 20 11 20 10 10
Option (yrs) 3x5 3 2x5 - 5
Capital structure:
Equity part 90 210 75 75 75
Leverage on asset 210 0 250 250 225
Total project cost 300 210 325 325 300
EBITDA payback (yrs) 6.4 4.9 8.1 6.5 7.3
IRR capital (%) 15% 19% 11% 12% 12%
* Capex includes conversion capex and alternative cost for asset (USD 50m)
68
Excelerate upping its stake in the orderbook with 8 FSRU options
Source: Pareto Securities
Current FSRU orderbook
Current orderbook comprises 7 FSRU vessels:
Höegh: 3 units (2013/14e)
Golar LNG: 3 units (2013/14/15e)
Excelerate: 1 unit (2014e)
Five newbuilds are already committed to projects:
Höegh: Indonesia/Lithuania/Chile
Excelerate: Brazil (VT3 Petrobras)
Golar: Chile (Gas Atacama)
First open FSRU slot in H1’15
FSRU orderbook
# Vessel Regas type Capacity Built Owner Yard
1 SRV Newbui ld SRV 170,000 2013 Q4 Höegh LNG Hyundai
2 SRV Newbui ld SRV 170,000 2014 Q1 Höegh LNG Hyundai
3 SRV Newbui ld SRV 170,000 2014 Q2 Höegh LNG Hyundai
4 SRV Newbui ld 170,000 2013 Q4 Golar LNG Samsung
5 SRV Newbui ld 160,000 2014 Q2 Golar LNG Samsung
6 SRV Newbui ld 173,400 2014 Q2 Excelerate Energy Daewoo
7 SRV Newbui ld 170,000 2015 Q1 Golar LNG Samsung
8 option SRV Newbui ld SRV 170,000 2014 Høegh LNG Hyundai
9 option SRV Newbui ld SRV 170,000 2014 Høegh LNG Hyundai
10 option SRV Newbui ld SRV 170,000 2014 Høegh LNG Hyundai
11 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
12 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
13 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
14 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
15 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
16 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
17 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
18 option SRV Newbui ld 173,400 2015-17 Excelerate Energy Daewoo
On contract / preferred bidder
69
APPENDIX
70
LNG newbuilding costs at USD 200m ..but low order intake at yards may force the price down
Current quotes at ~USD 200m delivery in 2015 from Korean yards
Average newbuild cost at USD 220m
*Source: Pareto Securities, Clarksons
LNG newbuild cost
222
190
200
210
220
230
240
250
260
2007-01 2008-01 2009-01 2010-01 2011-01
160k cbm NB price Avg price
USDm
71
LNG vessel sales
*Source: Pareto Securities, Worldyards
Date Received Current Name/Hull NoCapacity
(cbm)Built Seller Buyer
Price (Million
USD)Shipbuilder
18-Oct-2011 Woods ide Donaldson 165,500 19-Oct-2009 A.P. Mol ler - Maersk Teekay n/a Samsung
18-Oct-2011 Maersk ras laffan 138,200 27-Apr-2004 A.P. Mol ler - Maersk Teekay n/a Samsung
18-Oct-2011 Maersk Marib 165,500 Apr-2008 A.P. Mol ler - Maersk Teekay n/a Samsung
18-Oct-2011 Maersk Methane 165,500 Feb-2008 A.P. Mol ler - Maersk Teekay n/a Samsung
18-Oct-2011 Maersk Magel lan 165,000 Apr-2009 A.P. Mol ler - Maersk Teekay n/a Samsung
18-Oct-2011 Maersk Arwa 165,500 Sep-2008 A.P. Mol ler - Maersk Teekay n/a Samsung
18-Oct-2011 Maersk Meridian 165,500 15-Jan-2010 A.P. Mol ler - Maersk Teekay n/a Samsung
27-Sep-2011 Muscat lng 145,494 Apr-2004 Mitsui OSK Lines , MOL Greek 185 Kawasaki
27-Sep-2011 Transgas 129,323 Dec-1977 Louis Dreyfus n/a n/a France-dunkerque
1-May-2011 LNG Libra 126,750 1979 MOL Höegh LNG 53
24-May-2011 Clearsky 173,000 2011 TMT Stena Bulk 260 Daewoo, DSME
24-May-2011 Crysta lsky 173,000 2011 TMT Stena Bulk 260 Daewoo, DSME
24-May-2011 Bluesky 145,700 2006 TMT Stena Bulk 170 Daewoo, DSME
23-Mar-2011 WilEnergy (ex Banshu Maru) 125,542 1983 J3 (MOL, NYK, K Line) Awi lco 24 Mitsubishi Heavy, MHI
23-Mar-2011 WilGas (ex Dewa Maru) 125,877 1984 Awi lco 24 Mitsubishi Heavy, MHI
23-Mar-2011 WilPower (ex Bishu Maru) 125,929 1983 Awi lco 24 Kawasaki Heavy
20-Mar-2011 Aseem 155,000 Sep-2009 India Lng Transport No 1 Kawasaki Kisen Kaisha, K Line n/a Samsung
19-Mar-2011 Ejnan 145,000 Jan-2007 NYK Line [NYK Group] Kawasaki Kisen Kaisha, K Line n/a Samsung
18-Mar-2011 Echigo Maru 125,814 Aug-1983 NYK Line / MOL / K Line Kawasaki Kisen Kaisha, K Line n/a Mitsubishi Heavy, MHI
14-May-2010 Koto 125,468 Jan-1984 NYK Line [NYK Group] BW Gas [BW Group] 10 Kawasaki
24-Jul -2008 Hoegh Gandria 123,512 Oct-1977 Hoegh Autol iners Bluewater Group 40 HDW
04-Apr-2008 Polar eagle 88,200 Jun-1993 Teekay Norwegian 115 Chita Works
04-Apr-2008 Arctic sun 89,089 Dec-1993 n/a Norwegian 115 Chita Works
11-Jan-2008 FSRU Toscana 137,000 16-Jun-2004 Golar LNG OLT Offshore 231 Hyundai Heavy, HHI
20-Dec-2007 Granatina 138,538 30-Dec-2003 Royal Dutch Shel l Golar LNG n/a Daewoo, DSME
07-Sep-2007 Charm junior 50,240 Sep-1971 Gaz De France Bluesky Navigation n/a Alstom
19-Feb-2007 Margaret Hi l l 87,600 Nov-1974 Hoegh Autol iners Maverick LNG n/a Moss rosenberg s tavanger
08-Sep-2006 Scf Arctic 70,213 22-Dec-1969 BG Group n/a n/a Kockums mekaniska
08-Sep-2006 Scf Polar 70,237 01-May-1969 BG Group n/a n/a Kockums mekaniska
23-Jun-2005 Methania 131,235 13-Oct-1978 Bocimar [CMB Group] Distrigas n/a Boelwerf - Temse
25-Mar-2004 Cinderel la 25,500 Mar-1965 Chemikal ien Seetransport TMT n/a Seine
72
LNG resale values
*Source: Pareto Securities
Annual EBITDA NPV EBITDA
3y avg TC,
USD/d USDm USDm 180 190 200 210 220 230 240 250
70,000 19 46 189 197 205 212 220 228 236 244
80,000 22 56 198 206 214 222 229 237 245 253
90,000 26 65 207 215 223 231 239 246 254 262
100,000 30 74 216 224 232 240 248 256 263 271
110,000 33 83 225 233 241 249 257 265 272 280
120,000 37 92 234 242 250 258 266 274 282 289
130,000 41 101 243 251 259 267 275 283 291 299
140,000 Current 44 110 252 260 268 276 284 292 300 308
150,000 48 119 261 269 277 285 293 301 309 317
160,000 Pareto est 52 128 270 278 286 294 302 310 318 326
170,000 55 137 280 287 295 303 311 319 327 335
180,000 59 146 289 297 304 312 320 328 336 344
190,000 62 155 298 306 313 321 329 337 345 353
200,000 66 164 307 315 323 330 338 346 354 362
Input
NB lead time, yrs 3.0
WACC 10.0%
OPEX, USD/d 13,000
G&A, USD/d 2,500
Drydock, USD/d 3,288
Total operating cost 18,788
Payment year 1 20%
Payment year 2 10%
Payment year 3 70%
Newbuilding price USDm
Imp
lied
resale
value
73
LNG secondhand values and implied resale values
*Source: Pareto Securities
Age Built
-3 2015 185 190 200 210 220 230 240 250
-2 2014 207 212 221 230 240 249 258 268
-1 2013 229 233 242 251 259 268 276 285
0 2012 251 255 263 271 279 287 295 303
1 2011 245 248 256 264 271 279 287 294
2 2010 238 242 249 257 264 271 279 286
3 2009 231 235 242 249 257 264 271 278
4 2008 225 228 235 242 249 256 263 270
5 2007 218 221 228 235 242 249 255 262
6 2006 211 215 221 228 234 241 247 254
7 2005 205 208 214 221 227 233 240 246
8 2004 198 201 207 213 220 226 232 238
9 2003 192 194 200 206 212 218 224 230
10 2002 185 188 193 199 205 210 216 222
11 2001 178 181 186 192 197 203 208 214
12 2000 172 174 179 185 190 195 200 205
13 1999 165 168 172 177 182 187 192 197
14 1998 158 161 166 170 175 180 185 189
15 1997 152 154 159 163 168 172 177 181
16 1996 145 147 152 156 160 164 169 173
17 1995 139 141 145 149 153 157 161 165
18 1994 132 134 138 142 145 149 153 157
19 1993 125 127 131 134 138 142 145 149
20 1992 119 120 124 127 131 134 137 141
Vessel value, USDm Implied resale value basis long
term rates
Implied
TC rate resale value
USD/d USDm
70,000 175
80,000 210
90,000 244
100,000 278
110,000 312
120,000 347
130,000 381
140,000 415
150,000 449
Input
NB lead time, yrs 3.0
WACC 10.0%
OPEX, USD/d 13,000
G&A, USD/d 2,500
Drydock, USD/d 3,288
Total operating cost 18,788
Lifetime, years 35
Scrap value, USDm 19
Scrap price, USD/lt 644
74
LNG vessel returns
*Source: Pareto Securities
Implied Implied
Resale Newbuilding break-even break-even EBITDA Value basis
TC rate Market Price Order Price EBITDA multiple IRR (rem life) EBITDA multiple IRR (rem life) resale newbuild bss TC rate TC rates
USDm USDm USDm*** basis TC rate Basis TC rate basis TC rate Basis TC rate TC rate TC rate USDm USDm
70,000 294 210 16.3 5.2% 11.7 8.1% 104,500 79,400 18 175
80,000 294 210 13.7 6.6% 9.7 9.9% 104,500 79,400 22 210
90,000 294 210 11.7 8.0% 8.4 11.7% 104,500 79,400 25 244
100,000 294 210 10.3 9.4% 7.3 13.5% 104,500 79,400 29 278
110,000 294 210 9.1 10.7% 6.5 15.2% 104,500 79,400 32 312
120,000 294 210 8.2 11.9% 5.9 17.0% 104,500 79,400 36 347
130,000 294 210 7.5 13.2% 5.3 18.7% 104,500 79,400 39 381
140,000 294 210 6.9 14.4% 4.9 20.4% 104,500 79,400 43 415
150,000 294 210 6.3 15.7% 4.5 22.1% 104,500 79,400 46 449
160,000 294 210 5.9 16.9% 4.2 23.8% 104,500 79,400 50 483
170,000 294 210 5.5 18.1% 3.9 25.5% 104,500 79,400 53 518
180,000 294 210 5.2 19.4% 3.7 27.2% 104,500 79,400 57 552
Input
NB lead time, yrs 3.0
WACC 10.0%
OPEX, USD/d 13,000
G&A, USD/d 2,500
Drydock, USD/d 3,288
Total operating cost 18,788
Lifetime, years 35
Scrap value, USDm 19
Scrap price, USD/lt 644
NewbuildResale
75
FLNG projects
*Source: Pareto Securities, Upstream, Market sources, Höegh LNG
Project Name Participants Country Status
Prelude LNG Shel l / SHI / Technip Austra l ia FID achieved
Cash Maple PTT Austra l ia Pre-FEED completed
Sunrise Woods ide / Shel l / ConocoPhi l l ips Austra l ia Under review
Santos Pre-sa l t GDZ Suez / Santos Austra l ia FID delayed post 2013
Caribbean coast Paci fic / Exmar Austra l ia Service agreement s igned
Abadi FLNG Inpex / Shel l Indones ia FEED to s tart end 2012
PNG FLNG Höegh / Petromin / DSME / CB&I Papa New Guinea In process
Gulf LNG Flex LNG / SHI / WorleyParsons / Kanfa Aragon Papa New Guinea Under review
Sarawak Kanowit Petronas Malays ia FID achieved
Sarawak Rotan Petronas / Murphy Malays ia On-going pre-FEED studies
Tamar FLNG Noble / HLNG / DSME Israel Pre-FEED completed
Gulf Exports Excelerate Energy USA On-going FEED
76
FSRU projects operational and under construction
Source: Pareto Securities
FSRU projects - operational
# Country Location Project name In operation Developer Unit provider
1 UK Teesport, Tees ide Tees ide GasPort 2007 Excelerate Energy Excelerate Energy
2 Argentina Bahia Blanca, 600km SW Buenos Aires Bahia Blanca GasPort 2008 YPF/Repsol/Stream Excelerate Energy
3 USA Massachusetts Bay Northeast Gateway 2008 Excelerate Energy Excelerate Energy
4 Brazi l Rio de Janeiro Baia de Guanabara, VT1 2009 Petrobras Golar LNG
5 Brazi l Ceara Pecem, VT2 2009 Petrobras Golar LNG
6 Kuwait 40km south of Kuwait Ci ty Mina Al -Ahmadi GasPort 2009 KNPC Excelerate Energy
7 Dubai Jebel Al i Dubai LNG 2010 Dusup Golar LNG
8 USA Offshore Gloucester, Massachusetts Neptune Project 2010 GDF Suez GDF Suez
9 Argentina Belen de Escobar, Buenos Aires GNL Escobar 2011 Enarsa/YPF Excelerate Energy
10 Indones ia Jakarta Bay West Java LNG 2012 Pertamina/PGN Golar LNG
FSRU projects - under construction
# Country Location Project name Start up Developer Unit provider
1 Ita ly 20km offshore Livorno OLT Offshore 2012 OLT Offshore LNG Toscana OLT (Golar Frost)
2 Israel Hadera Hadera, Is rea l 2012 Isreal Electric Co Excelerate Energy
3 Indones ia Lampung, Sumatra Lampung FSRU 2013 Perusahaan Gas Negara Höegh LNG
4 China Tianjin Nanjiang Port 2013 CNOOC GDF Suez / Höegh LNG
5 Brazi l Santa Catarina (Guanabara Bay) Sao Francisco, VT3 2014 Petrobras Excelerate Energy
6 Lithuania Kla ipedos Port AB Kla ipedos Nafta 2014 AB Kla ipedos Nafta Höegh LNG
7 Puerto Rico Southern coast of Puerto Rico (near Sa l inas) Aguierre GasPort 2014 Puerto Rico Electric Power Authori ty Excelerate Energy
8 India Kakinada/Vishakapatnam Andhra Pradesh LNG project 2014 APGDC GDF Suez
9 Jamaica Port Esquivel Jamaica LNG, Exmar 2015 Petro Jamaica Exmar
10 Chi le Meji l lones Meji l lones LNG project 2015 Gas Atacama Golar LNG
77
FSRU projects in pipeline to take FID
Source: Pareto Securities
# Country Location Project name Start up Developer
1 Argentina Puerto Cuatreros , Buenoes Aires Cuatreros 2013 Enarsa/YPF
2 Bangladesh Moheshkhal i Is land, Bangladesh Chittagong LNG project 2013 PetroBangla
3 Bahra in Bahra in Bahra in FSRU Bapco
4 Indones ia Java / Semarang Centra l Java LNG 2014 Pertamina
5 Abu Dhabi Fuja i rah Abu Dhabi LNG project 2014 Government
6 Chi le Quintero Bay Quintero LNG project 2014 Colbun/AES Gener
7 Uruguay 12km off the coast, Sol i s Grande GNL Del Plata 2014 UTE/Ancap
8 India Gangavaram, Andhra Pradesh Petronet floater LNG 2014 Petronet
9 Lebanon Lebanon Lebanon FSRU 2015 Government
FSRU projects - proposed (study)
# Country Location Project name Start up Developer/operator
1 Albania TBC Albania Albania LNG*
2 Argentina 15 mi les southeast of Bahia Blanca Punta Al ta LNG*
3 Argentina Rio Negro San Matias Gul f
4 Bangladesh Bangladesh LNG project Bangladesh Power Development Board
5 Belgium Zeebrugge Zeebrugge second jetty Exmar
6 China Shandong Shandong LNG CNOOC
7 China Yancheng Yancheng LNG CNOOC
8 Chi le Talcahuano Concepcion International
9 Croatia Croatia Adria LNG Pl inacro
10 Germany Wilhelmshaven Wilhelmshaven GasPort Excelerate Energy
11 Ghana Ghana Ghana LNG Ghana Energy Commiss ion
12 Greece Greece Gulf of Corinth
13 Greece Greece Kavala*
14 Guadeloupe Guadeloupe Guadeloupe LNG EDF/Gasfin
15 India West coast Swan Energy
16 India West coast Rel iance Power
17 Ita ly Ita ly Azzurro LNG TORP
18 Ita ly Fa lconara, Le Marche Fa lconara LNG
19 Ita ly Offshore, Le Marche Tri ton LNG Höegh LNG
20 Kenya Kenya Kenya LNG Kenya Electrici ty Generation Co
21 Malays ia Port Dickson, Malays ia Melaka LNG
22 Martinique Martinique Martinique LNG EDF/Gasfin
23 Mexico Tamaul ipas , Puerto Mezquita l , offshore GoM El Dorado
24 Mexico Baja Ca l i fornia Offshore Rosari to
25 Netherlands Ri jn Platform, Offshore Hague TAQA LNG
26 Pakis tan Karachi Mashal LNG* Sui Southern Gas
27 Panama Bahia de las Minas
28 Panama Colon Panama LNG
29 Sri Lanka Sri Lanka Sri Lanka LNG Government
30 United Kingdom East Iri sh Sea, Offshore Morecambe Bay Port Meridian Höegh LNG
31 United Kingdom East Iri sh Sea Gateway LNG
32 Vietnam Vietnam Vietnam LNG*
78
Unconventional gas should not be a threat to LNG demand outside of US
Source: Wood Mackenzie; IEA; Pareto
Europe: Growth in demand and prod ’10-‘25 China: Growth in demand and prod ’10-‘25
Several factors point to fairly low growth in unconventional gas outside of US, including
Lack of (i) detailed data on the geological potential of the resources, (ii) experience with onshore drilling, and (iii) pipeline infrastructure, rigs and fracturing equipment
High population density. Many European countries have a population density above 100-200 hab/km2 compared to 30 hab/km2 in the US and 3 hab/km2 in Canada
Less favorable geology. European shale resources are on average 1.5 times deeper underground than in the US, according to the Oxford Institute for Energy Studies
265
21 50
8.6%
1.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0
30
60
90
120
150
180
210
240
270
Chinese demand Chinese conventionalprod.
Chineseunconventional prod.
Growth 2010-2025 (lhs) CAGR 2010-2025 (rhs)
Growth 2010-2025 (bcm) CAGR 2010-2025
136
-82
9
1.5%
-2.4%
-3%
-2%
-1%
0%
1%
2%
-100
-75
-50
-25
0
25
50
75
100
125
150
European demand Europeanconventional prod.
Europeanunconventional prod.
Growth 2010-2025 (lhs) CAGR 2010-2025 (rhs)
Growth 2010-2025 (bcm) CAGR 2010-2025
126 126 126 126 126 126 126 12696
113
119 122 125 128151
174194 205
100
150
200
250
300
350
2009 2010 2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e
Asian LNG supply
Middle East LNG supply, net of domestic demand
Asian LNG demand
bcm
79
Atlantic – Asian trade is likely to increase
*Supply is based current capacity and capacity under construction. Demand is based on regasification capacity additions and IEA forecasts, CAGR of 7% in 2010-2018 Source: BP; IEA; Company data; Pareto
Asian LNG demand vs. Asian and Middle Eastern LNG supply 2009 – 2018e
Potential for Atlantic – Asian flow is higher in 2013-
2018 than in 2011-2012
80
Commodity markets cycle
*2012-2016e based on 92% utilization of existing capacity and capacity under construction **Assumes that 1 bcm/year requires 1.15 ships ***Assumes that 50% of current proposed capacity comes on stream Source: Golar LNG
EMBRYONIC GROWTH MATURE
80
Capital intensive infrastructure projects
Bi-lateral take or pay arrangements
Project financing
Point-to-point long-term contracts
Crude 1970 US crude decline Global trade rises 1983 NYMEX Platts/OPIS indices NA Gas 1987 Take or pay contracts 1987+ FERC 497/636 Gas Marketers 1990 NYMEX Gas Daily Indices NA Power 1995 Utilities 1995 Mega NOPR Energy merchants 1998 Cal ISO Financial markets LMP LNG Today
Deep physical liquidity
Value chain fragmented
Arbitrage opportunities
Term forward liquidity
Complex derivative/option structure
Numerous firms “rationalized”
Asset, utility, monopoly
players
Merchant optimizers
Active spot trading
Spreads compressing
Forward market tenor
Contract unbundling
Inefficiencies = trading profits
Competition intensifies though capital inflows/new entrants
Spot trading initiated
Poor liquidity
Wide bid/offers
No forward market
Bundled contracts/value chain
Rise of trading firms Time
Commodity Trading
Life-Cycle Patterns
81
The number of trade routes has surged
Source: BP; Pareto
Number of trade routes (Country level)
The number of trade routes have increased from 41 in 2000 to 185 in 2010
41 44 48 43 4856
7284
98
134
163
180
0
25
50
75
100
125
150
175
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Number of routes (country level)
82
Imports and exports of spot and short term volumes 2010
*Defined as contracts with duration of four years or less Source: Bloomberg; IEA; Pareto
Spot/short term* imports 2010
Country bcm Share
1 Europe 18.4 33%
2 Japan 9.8 17%
3 Korea 7.5 13%
4 US 4.0 7%
5 Taiwan 3.5 6%
6 Middle East 2.9 5%
7 Brazil 2.9 5%
8 India 2.2 4%
9 Argentina 1.8 3%
10 China 1.5 3%
11 Canada 0.9 2%
12 Chile 0.4 1%
13 Mexico 0.3 1%
14 Puerto 0.1 0%
Spot/short term* exports 2010
Country bcm Share
1 Qatar 14.4 26%
2 Trinidad & Tobago 9.6 17%
3 Nigeria 6.9 12%
4 Egypt 4.1 7%
5 Russia 4.1 7%
6 Norway 2.7 5%
7 Oman 2.2 4%
8 Yemen 2.1 4%
9 Australia 1.7 3%
10 Equat. Guinea 1.7 3%
11 Algeria 1.6 3%
12 Abu Dhabi 1.3 2%
13 Malaysia 1.3 2%
14 Peru 0.9 2%
15 US 0.8 1%
16 Indonesia 0.6 1%
83
Underlying sources of spot LNG volumes
Ramp-up volumes: Liquefaction plants in the ramp-up phase whose long term contracts not yet have taken effect have available LNG volumes for the spot market
Liquefaction capacity deliberately set aside for spot sale: Increased liquidity in spot gas markets in Europe and US has given confidence to LNG producers that they will be able to market volumes not covered by long-term contracts
Self contracting: In many cases E&P companies has self-contracted LNG volumes, which their trading arms sell in the spot market to capture arbitrage opportunities
Diverted cargoes: LNG volume on long term contracts might be diverted away from its original destination and sold spot. In this case, the extra profit earned by diverting the cargo is shared between the seller and the original buyer
Reloaded LNG cargoes: Once a LNG cargo has been delivered at the original buyer’s terminal it can be shipped further to a new buyer. In this case the original buyer keeps all the profit.
Source: Pareto
84
LNG fleet ownership profile
Independent shipping companies own around 27% of the current operational fleet and have 10% of the orders
National companies own 63% of the fleet and have 80% of the orders
Multinational oil and gas companies - notably Shell, BG and BP - have 11% of the fleet and 10% of the orders
*As at 1 March 2011. Ships are assigned to a category based on the majority shareholder. In reality, many ships have a mix of owners that fall across more than one category Source: Wood Mackenzie; Pareto
LNG fleet ownership* profile
11% 10%
27%
52%6%
30%
29%
27%10%
0%
20%
40%
60%
80%
100%
Operational Ordered
Independent National - Other National - South Korea
LNG fleet ownership* profile
85
LNG fleet charterer profile
See next slide for descriptions
*As at 1 March 2011 Source: Wood Mackenzie; Pareto
LNG fleet charterer* profile
17% 15%
12% 14%
20%29%
53%43%
0%
20%
40%
60%
80%
100%
Operational Ordered
LNG seller controlled Multinational Independent LNG buyer controlled
LNG fleet charterer profile
86
LNG fleet charterer categories
LNG seller controlled: Mostly national LNG exporters, including Nigeria LNG, Oman LNG, Petronas, Qalhat LNG, Qatargas, RasGas and Sonatrach. In most instances, ships are chartered in from national shipping companies, or joint ventures where local entities have stakes in ships e.g. Qatar Gas Transport.
Multinational controlled: Multinational oil and gas companies, such as Shell, BP, GDF Suez and BG, are now active charterers of independently-owned ships
Buyer controlled: A ship employed by a company that's main activity in LNG is as a buyer (will be on the buy side of long-term contracts, focus of LNG assets will be on the regas side. Examples include TEPCO, Tokyo Gas and KOGAS.
Independent controlled: A ship employed by a company that does not have significant LNG assets (apart from ships). Could be a shipowner or a trader. These companies have ordered ships often without commitment to charters. Some of these owners seek to deploy their ships in short and medium-term contracts where freight rates could potentially be substantially higher than those obtainable under long-term contracts
Source: Pareto
87
World LNG exports and imports 2000 - 2011
Source: Bloomberg; Pareto
World LNG exports 2000 - 2011
World LNG imports 2000 - 2011 World LNG imports distribution 2010
World LNG exports distribution 2010
0
40
80
120
160
200
240
280
320
360
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
Atlantic basin Africa Middle East Asia/Pacific
World LNG exports (bcm, annualized)
39 %
34 %
20 %
7 %
Asia/Pacific
Middle East
Africa
Atlantic (ex.Africa)
World LNG exports by region 2010
0
40
80
120
160
200
240
280
320
360
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
Latin America North America Europe Asia
World LNG imports (bcm, annualized)
58 %28 %
7 %
3 % 4 %
Asia
Europe
North America
Latin America
Other
World imports by region 2010
88
Global LNG imports and exports by country
Source: BP; Pareto
bcm ShareJapan 93.5 31%South Korea 44.4 15%Spain 27.5 9%United Kingdom 18.7 6%Taiwan 14.9 5%France 13.9 5%China 12.8 4%US 12.2 4%India 12.2 4%Italy 9.1 3%Turkey 7.9 3%Belgium 6.4 2%Mexico 5.7 2%Chile 3.1 1%Portugal 3.0 1%Brazil 2.8 1%Kuwait 2.8 1%Canada 2.0 1%Argentina 1.8 1%Greece 1.2 0%Dominican Republic 0.8 0%Puerto Rico 0.8 0%UAE 0.2 0%
Total 297.6 1.0
Global LNG imports 2010
bcm ShareQatar 75.7 25%Indonesia 31.4 11%Malaysia 30.5 10%Australia 25.4 9%Nigeria 23.9 8%Trinidad & Tobago 20.4 7%Algeria 19.3 6%Russia 13.4 5%Oman 11.5 4%Egypt 9.7 3%Brunei 8.8 3%UAE 7.9 3%Yemen 5.5 2%Norway 5.3 2%Equatorial Guinea 5.2 2%Peru 1.8 1%US 1.6 1%Libya 0.3 0%Angola 0.0 0%Total 297.6 100%
Global LNG exports 2010
89
World LNG demand to grow rapidly, led by Non-OECD Asia and Europe
Growth 2010-2025e
Non-OECD Asia
CAGR: 10.6%
39% of world growth
Europe
CAGR: 5.4%
38% of world growth
OECD Asia
CAGR: 1.3%
10% of world growth
Other (Latin Am, Africa)
CAGR: 4.6%
13% of world growth
Source: BP; Pareto
World LNG demand 1990 – 2025e
0
100
200
300
400
500
600
700
1990 1995 2000 2005 2010 2015 2020 2025 2030
Other Non-OECD Asia OECD Asia Europe
World LNG imports (bcm/year)
90
There is large upside to gas demand
Gas consumption per capita is significantly lower than oil consumption per capita across the board
Source: BP; IMF; Pareto
Consumption per capita: Natural gas vs. oil
13.9
6.1
2.9
0.7 0.4 0.3
22.2
10.3
4.5 4.6
2.41.0
0
5
10
15
20
25
US EU World Brazil China India
Natural gas Oil
boe/year
91
Power generation is the main demand driver
Power generation is expected to be the main growth driver for natural gas demand, though firm growth is also expected in the industrial and residential/commercial segments
Natural gas has several advantages compared to other fuels in the power generation segment:
Cheap, Clean, Low technical risk, Short lead times, Generation flexibility, Storable
Source: Exxon; IEA; Pareto
World gas demand growth ‘10-’30 (Exxon) World gas demand growth ‘10-’30 (IEA)
2.3%
1.7%
1.4%
1.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0
300
600
900
1,200
1,500
Power Ind./Other Residential/Com. Total
Growth 2010-2030 (lhs) CAGR 2010-2030 (rhs)
bcm CAGR 2010-2030
1.6%1.5%
0.9%
1.4%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0
300
600
900
1,200
1,500
Power Ind./Other Residential/Com. Total
Growth 2008-2030 (lhs) CAGR 2008-2030 (rhs)
bcm CAGR 2008-2030
92
Gas is taking a larger share of the power generation market
Natural gas is taking a lager share of the power generation market
1980: 17%
2010: 24%
2030e: 27%
Key drivers: Natural gas is
Cheap
Clean
Low technical risk
Short lead times
Generation flexibility
Storable
Source: Exxon; Pareto
World power generation distribution 1980 – 2030e
22%13% 8% 7% 5% 4% 3%
17%20%
21% 22% 24% 26% 27%
44%41% 43% 45% 47% 42% 37%
9%18% 19% 17% 15% 17% 19%
8% 6% 6% 6% 6% 6% 6%
0%
20%
40%
60%
80%
100%
1980 1990 2000 2005 2010 2020e 2030e
Other Renewables Wind Hydro Nuclear Coal Gas Oil
World power generation demand distribution
93
Gas is cleaner than other fossil fuels and more efficient than electricity
Gas is by far the cleanest fossil fuel Gas is much more energy efficient than electricity
Source: EIA; AGA; Pareto
CO2 emissions by fuel Energy efficiency
118
140156
173
195215
0
50
100
150
200
250
Natural gas Propane Gasoline Residual oil Wood Coal
CO2 emissions by fuel (pounds CO2/mmbtu)
370
110
0
100
200
300
400
Electricity Natural gas
Energy needed to deliver 100 mmbtu to end-users (mmbtu)
94
Gas is a cheap source of new power, which is supportive for demand
At USD 12-14/mmbtu gas is competitive relative to other energy sources, such as coal, nuclear and renewables, when it comes to investments in new power generation capacity
*Levelised cost includes all the costs over the power plant’s lifetime: initial investment, operations and maintenance, cost of fuel, and cost of capital . Assumptions: Carbon price at USD 30/ton, coal price at USD 134/ton and gas price at USD 13/mmbtu Source: IEA; Pareto
Levelised* cost of electricity for various fuel sources
0
50
100
150
200
250
300
350
Gas Coal Coal (CCS) Nuclear Windonshore
Solar PV(current)
Solar PV(2013e)
Capital Operational Fuel CO2
LCOE (USD/MWh)
95
Japanese nuclear-to-LNG switching sensitivity
Source: IEA; Pareto
Japanese nuclear-to-LNG swithing sensitivity
5 11 1621
2632
3742
4753
2%4%
5%7%
9%11%
12%14%
16%18%
0 %
4 %
8 %
12 %
16 %
20 %
0
10
20
30
40
50
60
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Share of nuclear power 2010 replaced by gas
Increased Japanese LNG demand (lhs)
Increased Japanese LNG demand relative to world LNG demand (rhs)
bcm vs. world LNG demand 2010
96
German nuclear-to-gas switching sensitivity
Source: IEA; Pareto
German nuclear-to-gas swithing sensitivity
3 68
1114
1720
2225
28
3%6%
10%13%
16%19%
22%25%
29%32%
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
0
5
10
15
20
25
30
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Share of 2010 nuclear power replaced by gas
Increased German gas demand (lhs)
Increased German gas demand relative to European LNG demand (rhs)
bcm vs. European LNG demand 2010
97
Nuclear power growth could come in well below consensus forecasts…
Over 2008-2030 world nuclear capacity declines from 391 GW to
340 GW in scenario A, 44% below IEA’s base case forecast (602 GW)
139 GW in scenario B, 47% below IEA’s base case forecast (602 GW)
*Assumption: All nuclear capacity that currently is under construction is brought online, but no additional capacity is added. In scenario A, plants are shut down after 50 years, while they are shut down after 40 years in in scenario B Source: IEA; Pareto
Scenario A*: Nuclear capacity 2008 vs. 2030 Scenario B*: Nuclear capacity 2008 vs. 2030
391
68119
340
-44%
IEA base case
0
100
200
300
400
500
600
700
2008 Underconstruction
Shutdown (>50years)
2030
World nuclear capacity, GW
391
68
320
139
-77%
IEA base case
0
100
200
300
400
500
600
700
2008 Underconstruction
Shutdown (>40years)
2030
World nuclear capacity, GW
98
… which gives considerable upside risk to consensus gas demand forecasts
Under scenario A and B, world gas demand increases by 2.0% and 2.4% p.a. through 2030, both significantly above IEA’s base case forecast of 1.5%
In 2030, world gas demand stands at 4,487 bcm in scenario A and 4,836 bcm in scenario B, or about 12% and 20% higher than IEA’s base case forecast of 4,021 bcm
Source: IEA; Pareto
World gas demand 1990 – 2030 under three scenarios
2.0% CAGR
2.4% CAGR
1.5% CAGR
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1990 1995 2000 2005 2010 2015 2020 2025 2030
1990-2010 IEA base case Scenario A Scenario B
World gas demand (bcm/year(
99
There is upside risk to consensus forecasts for Chinese demand growth
Only 4% of Chinese energy demand is met by gas, significantly lower than in most other countries
By 2020 however, the Chinese government target gas’ share to increase to 10%...
… in which case Chinese gas demand should increase by at least 12% p.a., significantly faster than consensus 4-9% forecast
Source: BP; Pareto
Gas’ share of energy demand by country 2009
55%51%
47%
28% 26% 26% 23% 22%17%
13% 11% 10%
4%
World
0%
10%
20%
30%
40%
50%
60%
Ru
s
Ma
lays
ia
Mid
dle
Eas
t
N. A
m
Ind
on
esi
a
EU
Afr
ica
Lati
n A
m
Jap
an
Sou
th K
ore
a
Asi
a P
aci
fic
Ind
ia
Ch
ina
Natural gas' share of total energy demand
100
LNG supply and demand overview
*Based on 92% utilization Source: Company data; IEA; Pareto
LNG supply and demand overview 2010 2011 2012e 2013e 2014e 2015e 2016e
LNG supply*
Operational & under construction bcm/year 298 331 339 344 348 377 402
Growth y/y - 22.8% 11.0% 2.4% 1.5% 1.1% 8.6% 6.6%
inc. 50% of proposed bcm/year 298 331 339 344 348 378 413
Growth y/y - 22.8% 11.0% 2.4% 1.5% 1.1% 8.8% 9.0%
LNG demand
5.0% annual growth bcm/year 298 331 347 365 383 402 422
7.0% annual growth " 298 331 354 379 405 434 464
Surplus/deficit w/5% demand growth
Operational & under construction " 0 -9 -21 -35 -25 -20
50% of proposed " 0 -9 -21 -35 -24 -10
Surplus/deficit w/7% demand growth
Operational & under construction " 0 0 -15 -35 -58 -56 -62
50% of proposed " 0 0 -15 -35 -58 -55 -51
101
Regasification capacity utilization 2010
Except China, most countries that currently import LNG are fairly well supplied with regasification capacity
Source: IEA; Bloomberg; Pareto
Utilization of regasification capacity 2010
0% 20% 40% 60% 80% 100%
BelgiumUS
GreeceKoreaIndiaBrazilJapan
TaiwanAsia
EuropePortugal
SpainTurkeyFranceChina
Annual average At peak month
Utilization of regasification capacity 2010
102
Overview of regasification capacity 2005 - 2013e
Source: TRI-ZEN; Pareto
World LNG regasification capacity 2005-2013e Utilization of regasification capacity
0
200
400
600
800
1,000
1,200
2005 2006 2007 2008 2009 2010 2011e 2012e 2013e
Asia Europe North America Latin America Middle East
World regasification capacity (bcm/year)
0 %
10 %
20 %
30 %
40 %
50 %
60 %
2005 2006 2007 2008 2009 2010 2011e 2012e 2013e
Asia Europe North America
Utilization of regasification capacity (annual avg)
103
There are healthy profit margins for LNG exports
*Excess profit. Typically captured in the upstream/liquefaction part of the value chain Source: Bloomberg; IEA; Pareto
Qatar – W. Europe at spot gas price
Qatar – Japan/Korea Australia – Japan/Korea
Qatar – W. Europe at Long Term contracts
1.0
4.0
1.9
0.4
2.7
10.0
0
2
4
6
8
10
12
Gas cost Liquefaction Shipping Regas Profit* Gas salesprice (spot
price)
LNG value chain Qatar - W. Europe (USD/mmbtu)
1.0
4.0
1.90.4
5.7
13.0
0
2
4
6
8
10
12
14
Gas cost Liquefaction Shipping Regas Profit* Gas salesprice (Oil-
linked LT)
LNG value chain Qatar - W. Europe (USD/mmbtu)
1.0
4.0
2.00.4
9.1
16.5
0
2
4
6
8
10
12
14
16
18
Gas cost Liquefaction Shipping Regas Profit* Gas salesprice
LNG value chain Qatar - Japan/Korea (USD/mmbtu)
5.0
4.0
1.30.4
5.9
16.5
0
2
4
6
8
10
12
14
16
18
Gas cost Liquefaction Shipping Regas Profit* Gas salesprice
LNG value chain Australia - Japan/Korea (USD/mmbtu)
104
LNG shipping costs overview, July 2012
Source: Bloomberg; Pareto
LNG shipping costs, July 2012
Route USD/mmbtu
Australia to Belgium 3.2
Australia to Japan 1.4
Australia to South Korea 1.4
Australia to Spain 2.8
Australia to United Kingdom 3.2
Australia to US East Coast 3.3
Australia to US Gulf Coast 3.5
Nigeria to Belgium 1.4
Nigeria to Japan 3.8
Nigeria to South Korea 3.6
Nigeria to Spain 1.3
Nigeria to United Kingdom 1.4
Nigeria to US East Coast 1.5
Nigeria to US Gulf Coast 1.7
Qatar to Belgium 2.3
Qatar to Japan 2.3
Qatar to South Korea 2.2
Qatar to Spain 1.9
Qatar to United Kingdom 2.3
Qatar to US East Coast 2.6
Qatar to US Gulf Coast 3.0
Trinidad to Belgium 1.3
Trinidad to Japan 4.8
Trinidad to South Korea 4.7
Trinidad to Spain 1.3
Trinidad to United Kingdom 1.3
105
LNG supply cost estimates
Source: BP; Pareto
Route Gas cost Liquefac. Shipping Regas Total
Australia
Japan 3.0 - 7.0 3.0 - 5.0 1.0 0.5 7.5 - 13.5
US Gulf to
Europe 4.0 3.6 1.0 0.5 9.1
Japan 4.0 3.6 3.0 0.5 11.1
ME to
Europe 0 - 6.0 3.0 - 5.0 1.8 0.5 5.3 - 13.3
Japan 0 - 6.0 3.0 - 5.0 1.9 0.5 5.4 - 13.4
W. Africa
Europe 0 - 6.0 3.0 - 5.0 1.0 0.5 4.5 - 12.5
Japan 0 - 6.0 3.0 - 5.0 2.6 0.5 6.1 - 14.1
E. Africa
Japan 0 - 6.0 3.0 - 5.0 1.5 0.5 5.0 - 13.0
LNG supply cost (USD/mmbtu)
106
LNG supply costs
*Upstream costs range from USD 2/mmbtu to USD 9/mmbtu, liquefaction costs range from USD 3/mmbtu to USD 5/mmbtu, shipping costs range from USD 0.6/mmbtu to USD 3.0/mmbtu Source: Wood Mackenzie; Pareto
LNG supply costs*
7.58.8
10.2 10.6 11.4 12.2
9.310.5 10.5 11.1 11.8
0
2
4
6
8
10
12
14
Pre
lud
e
Go
rgo
n
Ich
thy
s
QC
LNG
Wh
eat
sto
ne
Sab
ine
AP
LN
G
Bro
wse
Plu
to
Kit
ima
t
GLN
G
Cost of LNG supply (USD/mmtbu, shipping to Asia)
FID taken Pre-FID
107
Approximate conversion factors
Source: BP
To
billion cubic billion cubic million tonnes million tonnes trillion British million barrels
Natural gas and LNG metres NG feet NG oil equivalent LNG thermal units oil equivalent
From
1 billion cubic metres NG 1 35.3 0.90 0.74 35.7 6.60
1 billion cubic feet NG 0.028 1 0.025 0.021 1.01 0.19
1 million tonnes oil equivalent 1.11 39.2 1 0.82 39.7 7.33
1 million tonnes LNG 1.36 48.0 1.22 1 48.6 8.97
1 trillion British thermal units 0.028 0.99 0.025 0.021 1 0.18
1 million barrels oil equivalent 0.15 5.35 0.14 0.11 5.41 1
Multiply by
108
Pipes or LNG – the next phase of the Snøhvit project
Today, the gas on the Snøhvit and Albatross fields are transported to the liquefaction plant located in Hammerfest by a 143 km pipeline
The capacity of the plant is about 5.6 bcm/year on one train
With the current solution, the field can produce gas until 2050, but operators want to increase output
Two solutions have been set out:
An extension of current pipes from the Norwegian Sea to the Barents Sea
A second LNG train at Melkøya
Final decision expected in June
The Snøhvit, Albratross and Askeladden gas fields
109
A second train should be less complication than train 1
Constructing a train 2 should be less complicated than train 1:
Operators have learned from the mistakes on train 1, i.e. more experience
Part of the infrastructure is in place
Different parts of the production line can be used both for train 1 and train 2
Likely location of train 2 marked in black circle
Overview picture of the Snøhvit liquefaction plant at Melkøya
110
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V. 08.12
111
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112
Disclaimers and disclosures
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113
Disclaimers and disclosures
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114
Disclaimers and disclosures
Appendix B
Disclosure requirements pursuant to the Norwegian Securities Trading ST Regulation § 3-11, letters d-f, ref the Securities Trading Act Section 3-10
Overview over issuers of financial instruments where Pareto Securities AS have prepared or distributed investment recommendation, where Pareto Securities AS or related companies have been lead manager/co-lead manager or have rendered publicly known not immaterial investment banking services over the previous 12 months:
Appendix C
Disclosure requirements pursuant to the Norwegian Securities Trading ST Regulation § 3-11 (4)
Column I shows the overall ratio of “Buy”, “Hold” and “Sell” in Pareto’s Recommendations in financial instruments.
Column II shows the ratio of “Buy”, “Hold” and “Sell” in Pareto’s Recommendations in financial instruments where Pareto Have provided investment banking services to the issuer the previous 12 months.
Appendix A
Disclosure requirements pursuant to the Norwegian Securities Trading Regulations section 3-10 (2) and section 3-11 (1), letters a-b
Pareto Securities AS does not alone or - together with affiliated companies or persons – owns a portion of the shares exceeding 5 % of the total share capital in any company where a recommendation has been produced or distributed by Pareto Securities AS.
Pareto Securities AS may hold financial instruments in companies where a recommendation has been produced or distributed by Pareto Securities AS in connection with rendering investment services, including Market Making.
Please find below an overview of material interests in shares held by employees in Pareto Securities AS, in companies where a recommendation has been produced or distributed by Pareto Securities AS.
By material interest is meant holdings exceeding a value of NOK 50 000.
Column I Column II
Buy 63.2% 94.4%
Hold 28.2% 5.6%
Sell 8.6% 0.0%
This overview is updated quarterly (last updated 15.07.2012).
CompanyAnalyst
holdings
Total
holdingsCompany
Analyst
holdings
Total
holdings
Algeta - 1 000 Olav Thon Eiendomsselskap 420 938
Archer - 17 500 Orkla - 194 202
Bonheur - 11 800 Petroleum Geo-Services - 35 600
BW Offshore - 230 486 Polarcus Limited - 280 612
BWG Homes 18 000 18 210 Protector Forsikring - 499 000
Cermaq - 3 000 Questerre Energy - 277 206
Discovery Offshore - 12 000 Renewable Energy Corp. - 24 961
DNB - 116 700 S.D. Standard Drilling - 100 000
DOF - 30 000 SalMar - 58 400
EOC Limited - 25 000 Sandnes Sparebank - 6 295
Farstad Shipping - 21 700 Seadrill - 4 550
Fred Olsen Energy 100 300 Selvaag Bolig - 50 000
Frontline - 10 000 Ship Finance Ltd - 2 768
Gjensidige Forsikring - 99 427 Solstad Offshore - 4 100
Golden Ocean Group - 50 380 Songa Offshore - 4 000
Havila Shipping - 12 450 Sparebank 1 Nord-Norge - 20 637
Höegh LNG - 86 203 Sparebank 1 SR-Bank - 129 128
Itera 40 000 41 000 Sparebanken Øst - 22 349
Kongsberg Gruppen - 73 700 Spectrum - 197 000
Lerøy Seafood Group - 37 400 Statoil - 58 550
Marine Harvest Group - 50 000 Storebrand - 2 263
Morpol - 116 214 Subsea 7 - 75 406
Norsk Hydro - 461 773 Telenor - 57 200
Norske Skogindustrier - 37 496 TGS-NOPEC - 7 450
Northland Resources - 392 000 Veidekke - 42 400
Norwegian Air Shuttle - 500 Wilh. Wilhelmsen Holding A - 404
Noreco - 245 807 Yara International - 31 328
Odfjell - 7 300
This overview is updated monthly (last updated 31.07.2012)
- Aker - GasLog - Prosafe
- Aker Floating Production - Haikui - Protector Forsikring
- Aker Seafoods - Havila Shipping - Reservoir Exploration Technology
- American Shipping Company - Hercules Offshore - Rocksource
- Archer - Houston American Energy Corp - SalMar
- Austevoll Seafood - Höegh LNG - Scana Industrier
- Bergen Group - Idex - Seadrill
- BW Offshore - Interoil - Selvaag Bolig
- Camillo Eitzen & Co. - KrisEnergy Holding Company - Sevan Marine
- Clearwater - Lyse Energi - Shamaran Petroleum
- Codfarmers - Marine Aluminium Holding - Siemens
- Concedo - Marine Subsea - SinOceanic
- DDI - Mecom Group - Songa Offshore
- Det Norske Oljeselskap - Neptune Offshore - Sparebank 1 SR Bank
- DNO International - Noreco - Sparebanken Møre
- Dockwise - Norse Energy Corp - Sparebanken Øst
- DOF - North Atlantic Drilling - Statoil
- Dolphin Group - North Energy - Swedbank
- Eitzen Maritime - Northland Resources - Teekay LNG
- Electromagnetic Geoservices - OSX - TTS Group
- Equinox Offshore - Pacific Drilling - Voss Resort
- Expro Intl. Group Holding - Polarcus - Wilh. Wilhelmsen
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Disclaimers and disclosures
Appendix D
This part applies to research reports prepared by Pareto Öhman. Disclosure of positions in financial instruments The beneficial holding of the Pareto Group is 1% or more of the total share capital of the following companies included in Pareto Öhman’s research coverage universe: Isconova, and Ruric. The Pareto Group has material holdings of other financial instruments than shares issued by the following companies included in Pareto Öhman’s research coverage universe: RusForest and PA Resources. Disclosure of assignments and mandates During the past 12 months, members of the Pareto Group have been lead manager or co-lead manager of publicly disclosed issues or offers of or with regard to securities of the following companies included in Öhman’s research coverage universe: Shamaran Petroleum, Lucara Diamonds, Tinkoff/Edigaco and Trigon Agri. During the past 12 months, members of the Pareto Group have provided other investment banking services to and received compensation for such services from the following companies included in Öhman’s research coverage universe: Africa Oil, BlackPearl Resources, Isconova, JLT Mobile Computers, RusForest, Trigon Agri, Lucara Diamonds and Shamaran Petroleum. Members of the Pareto Group provide market making or other liquidity providing services to the following companies included in Öhman’s research coverage universe: 2Entertain, Africa Oil, Beijer Electronics, Black Pearl Resources, Cloetta, Coastal Contacts, Episurf, Fastighets AB Balder, G&L Beijer, Isconova, JLT, NAXS, Partnertech, Prevas, Ruric, Shamaran Petroleum, Tethys Oil and Trigon Agri. Members of the Pareto Group have entered into agreements concerning the inclusion of the company in question in Öhman’s research coverage universe with the following companies: Africa Oil, Isconova and Shamaran Petroleum. This overview is updated monthly. Previous rating system (up to 16 Sep 2011) Rating Expected total return in six to twelve months OUTPERFORM The stock is expected to outperform the return on our Nordic sector universe NEUTRAL The stock is expected to perform in line with the return on our Nordic sector universe UNDERPERFORM The stock is expected to underperform the return on our Nordic sector universe