Singapore: Emergence of a new LNG market
Transcript of Singapore: Emergence of a new LNG market
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17th INTERNATIONAL CONFERENCE & EXHIBITION
ON LIQUEFIED NATURAL GAS (LNG 17)
Singapore: Emergence of a new LNG market
By: Dr. Anthony Barker, BG Group 16 April 2013
17th INTERNATIONAL CONFERENCE & EXHIBITION ON LIQUEFIED NATURAL GAS (LNG 17)
Legal notice
The following presentation contains forward-looking statements concerning BG Group plc’s strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which BG Group plc operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which can be controlled or predicted. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from the guidance given in this presentation for a number of reasons. For a detailed analysis of the factors that may affect our business, financial performance or results of operations, we urge you to look at the “Principal risks and uncertainties” included in the BG Group plc Annual Report & Accounts 2011. Nothing in this presentation should be construed as a profit forecast and no part of this presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. BG Group plc undertakes no obligation to update any forward-looking statements.
No representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information in this presentation and no responsibility or liability is or will be accepted by BG Group plc or any of its respective subsidiaries, affiliates and associated companies (or by any of their respective officers, employees or agents) in relation to it.
Singapore’s challenges
Source: Wood Mackenzie, November 2012 & EMA Singapore Energy Statistics Report 2012
75.7%
20.3%
4.0%
2011 gas demand
Power
Industry
Other
84.1%
15.9%
2011 gas supply
Indonesia
Malaysia
78.0%
18.4%
3.6%
2011 fuel mix for electricity generation
Natural Gas
Petroleum Products
Others
Power
Industry
Other
Indonesia
Malaysia
Natural gas
Petroleum products
Others
Consolidating demand
• Marketing multiple gas sales
contracts
• Inventory management and
24/7 commercial operations
• Market development
Sources: BG Group estimates 2012,Schlumberger Business Consulting, 2009
Singapore LNG demand
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2013 2014 2015 2016
mtp
a
Meeting Singapore’s challenges
Source: BG Group, 2012
Aggregator
(BG Group)
Terminal owner
(Singapore LNG)
Energy Market
Authority of
Singapore
Gas buyers LNG supplier
(BG Group)
BG Group’s LNG marketing
Henry Hub
mtp
a
Singapore
Source: BG Group Strategy Presentation, February 2012
Global assets, supply and markets
* Exclusive right to supply Potential liquefaction
Existing long term supply source Liquefaction under construction
Equity position
Existing import capacity
Long term customer
UK
USA
Nigeria
Egypt Trinidad
& Tobago
EG
Chile
Singapore*
Australia Tanzania
Canada
China
Japan
Brazil
India
• Pipeline gas moratorium
• Vesting contracts
• SLNG step-in and
underwriting
Policy and regulatory support
EMA initiatives and policies
0 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000
Q2
20
12
Q3
20
12
Q4 2
01
2
Q1 2
01
3
Q2
20
13
Q3
20
13
Q4
20
13
Q1
20
14
Q2
20
14
Q3
20
14
MW
Incremental gas generation capacity
Source: Tri-Zen Consulting, BG Group estimates, May 2012
Long-term sales
• 3 mtpa exclusive franchise
to supply Singapore
• Approx 2.6 mtpa
contracted with 10 – 20
year supply periods
• 10 gas buyers and ~15
GSAs
Long-term sales projection
Source: BG Group, November 2012
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
3.2
Q1
20
10
Q4
20
10
Q3
20
11
Q2
20
12
Q1
20
13
Q4
20
13
Q3
20
14
Q2
20
15
mtp
a
Singapore franchise state of play
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
Remaining Sales (3mtpa Franchise Forecast) Contracted Long-term Sales
mtp
a
Source: BG Group, November 2012
Contracted long-term sales
Remaining sales (3 mtpa franchise forecast)
Long-term sales
• BG Group has contracted at
three long-term price tranches
• Singapore’s power market
is now well supplied with
long-term volumes
• Buying interest seen from
2018 onwards
– Replacement of expiring pipeline
gas import contracts
– Demand growth driven by
industry
0.0
2.0
4.0
6.0
8.0
10.0
12.0
20
13
20
15
20
17
20
19
20
21
20
23
20
25
mtp
a
Incremental demand
Sumatra pipeline gas replacement
Natuna pipeline gas replacement
Malaysia pipeline gas replacement
BG Group franchise
Short-term supply security
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2013 2014 2015
mtp
a
Source: BG Group, December 2012
Available volumes for short-term sales
BG Group committed volumes
Potential for short-term sales
Short-term sales
79%
21%
2013 volumes • Through 2012, BG Group worked
closely with the regulator (EMA) to
develop:
– Standardised master short-term GSAs
– ‘Stand alone’ short-term GSAs
• Short-term interest driven by:
– Ramp up and commissioning
requirements
– Operational concerns
– Commercial opportunities to access
spot LNG
– Pipeline gas displacement
– Power market opportunities
Long-term sales
Short-term sales
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
GSA1 GSA2 GSA3 GSA4 GSA5 Cargoes
mt
Consolidating demand
Aggregator's short-term and spot GSAs
1 c
arg
o
2 c
arg
oe
s
3 c
arg
oe
s
Market development
Source: BG Group, November 2012
Singapore
LNG
inventory
Term
LNG Fuel oil &
oil products
Indonesia
piped gas
Malaysia
piped gas
Spot LNG
Electricity
procurement
100
150
200
250
300
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
05
= 1
00
Relative pricing of
fuel oil & Brent
Brent Fuel oil
Singapore market overview
-
2
4
6
8
10
12
14
16
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
mtp
a
Sources: BG Group estimates, November 2012 & EMA procurement framework consultation paper, March 2012
Aggregator franchise – long-term contracted supply
Long-term supply opportunities (EMA consultation paper)
Aggregator franchise – 3 mtpa
Short-term supply opportunities
Gas demand (EMA consultation paper) Terminal max throughput – facilities under construction
Pipeline gas displacement
• LNG is competitive against
pipeline gas in Singapore
• Spot LNG prices regularly
support short-term
displacement of pipeline gas
with LNG
Pipeline gas prices S
pot L
NG
prices
Pipeline gas
displacement
Market development LNG reloads
• Physical reload capability
enables break bulk
trans-shipment
• Demand side interest in LNG
reloads for various regional
markets
• Early stage assessment of
LNG bunkering under way
SLNG full development
Source: EMA.gov.sg
Conclusions
• Close cooperation among
BG Group, SLNG and EMA
• Aggregator model tailor made
to meet Singapore’s gas
market challenges. It could be
adapted to introduce LNG to
new markets
• BG Group is committed to
ongoing development of
Singapore gas market