Kraftigere introduksjon av LNG i Norge hva skal til Seminar arrangert av NOx-fondet og Norges Rederiforbund

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1 Kraftigere introduksjon av LNG i Norge hva skal til Seminar arrangert av NOx-fondet og Norges Rederiforbund Det globale og europeiske LNG og gassmarkedet Oslo, 20. november 2013 Dragos Talvescu Sund Energy

2 Full-picture perspective Sund Energy helps navigate into the energy future Energy Economics Environment Learning between countries, industries, energies, technologies and more Experience in small scale LNG and LNG as marine bunker Small-scale LNG value chain in the Nordic and Baltic region Existing players + potential investors Support to buyers Fjord Line ++ Discussions on developments in Europe/ globally by understanding the full picture of stakeholders Page 2

3 LNG er mer global - ulike kategorier aktører Viktigst LNG-kilde: Store gassprodusenter (oljeselskap) Oljeindeksert Spot last Spare LNG Noe LNG er tilgjengelig for tradere/ brokers osv. Tradisjonell gassleveranse via rør Gassmarkeder med egne priser Mottak og regassifisering/ importterminaler Økende andel spot Viktigst etterspørsel Store LNG-importører for egne markeder Premium priser små volumer, men voksende LNG-brukere («stranded» industri med re-gassifisering, skip, lastbil) Annen LNG Bruker naturgass fra markedet (USA + småskala) Page 3

4 LNG fungerer som lim mellom de regionale markedene Traditional view: Last resort for stranded gas to stranded market Long distance, long term business integrated chain Several small revolutions and a dash of uncertainty lately Oil prices are higher than expected coal prices much lower More gas reserves than expected demand much lower Easier to build infrastructure in bits LNG more flexible and scalable. Recession gives cost focus! Verdens årlig LNG-handel gikk litt ned i 2012 men stadig mer selges på spot Kilde: IGU World LNG Report, 2013 Page 4

5 Kan forskjellige regionale gasspriser vedvare? Globale LNG priser ved leveranse (estimert for november 2013) Billig gass verdenen Er $ 10-15/mmbtu den nye normalen? Kilde: FERC, oktober 2013 Page 5

6 Could the gas price globalise more? YES! Current regional difference strong partly due to bottlenecks USA artificially low will increase with more demand and exports Asia artificially high will fall with new import pricing and hubs Europe in the middle partly old contracts, partly lack of LNG These differences will lead to more portfolio optimisation Sellers going to best markets more flexible with new contracts Buyers going to best sellers more flexible with more alternatives A global price could develop to meet the electricity market As the coal price is global, this will set the level, with some nuance This will be the wholesale price of gas Could package for value to transportation, balancing etc. Page 6

7 LNG er fortsatt mye på oljelink, mens EU vil ha spot Mesteparten av LNG-en prises fortsatt mot oljeprodukter Særlig store importører Japan, Korea, Taiwan, Kina betaler høye priser (JKM) men mye gass brukes lokalt, og prises ikke mot olje Store spotmarkeder er USA, UK, og nå stadig mer resten av Nordvest Europa Store produsenter, særlig i Asia, har regulerte priser (over eller under kostpris) Stadig flere globale aktører ønsker å selge med USA-pris i bunn 2013: Spotprising er sannsynligvis blitt dominerende mekanisme i Europa Gassprisdannelse etter mekanisme (andeler, 2012) Globalt forbruk LNG import Europeisk forbruk Kilde: IGU, Wholesale Price Formation survey 2012, sommer 2013 Page 7

8 Many see a tight global LNG market. Is it, really? Much new LNG coming on reducing fears of shortage More supply than strictly needed - compete on price (not source) Lower prices good for demand, but how low can the producers go? Deliveries to Europe: Spill-over from higher priced markets? Selling LNG to Europe for spot markets (competing with coal) show low demand for oil-link LNG Loose LNG adds to global oversupply and price harmonisation Mye ny kapasitet forventet fremover LNG re-eksport fra EU-terminalene LNG makes gas more like oil Kilde: IGU World LNG Report, 2013 Page 8

9 Bildet er komplekst, og prisdriverne varierer over tid Supply Gas Price Infrastructure Supply and storage (and bottlenecks) Demand Influences - Technology - Economy - Environment Trading activity - Balancing - Hedging - Volumes? Energy policy Alternative energy to gas, Relative prices, incentives Voters NGO s Lobby Economic condition (recession vs. growth) and balance of trade Page 9

10 Gassprisene (engros) varierer mye i EU Kilde: DG Energy, Quarterly report on European gas markets, Q2 2013, July 2013 Page 10

11 /MWh både i nivå og prisingsmekanisme: Mer spot nå Monthly average import unit cost of gas NBP Day Ahead (Montel) Average German Border price (BAFA) "Pure oil-link" contract Coal Switching Price Old price Under supply? New price? 10 5 Over supply 0 Data: Eurostat, Montel, BAFA, Sund Energy Page 11

12 Statoil har valgt markedsprising i Tyskland Tradisjonelt Nå Driver Volume Value Prisdannelse/ mekanisme Oljelink Spot Verdi av fleksibilitet Portefølje Lav for produsentene, lett å tilby det til kjøperne Norsk produksjon til EU kjøpere, noe trading Høy for produsentene, kan nå holde gass tilbake Global produksjon for globale kjøpere Norge til EU fortsatt dominerende Leveransested Grense Hub Lange kontrakter år 5 år Page 12

13 mens Gazprom insisterer å beholde oljelink Gazprom is choosing value over volume "Choosing between 154 billion cm at a lower price and 150 billion cm at a higher price we choose to export 150 billion Alexander Medvedev, Gazprom deputy CEO, April 2012 «Last year we reduced volume by 10-12%, but the revenue was the same» Sergei Komlev, Gazprom Export, March 2013 Portfolio with several options Large home market: Gradually better prices Growing LNG portfolio (own production + sourced from others) Asia favourite now GMT growing Norwegian gas in UK Pipelines to Europe, Central and East Asia Holding back production await better prices Shtokman decision followed same logic Future outlook? Option 1: Hold back This would give higher spot prices and more comfort with oil link among «demanding» customers but at which cost? Option 2: Flow more This would give lower spot prices (unless others hold back) but mainly steady prices to Gazprom in Europe Revenue could be welcome, depending on sales in Asia? Page 13

14 Skifergass er ikke billig, særlig i Europa! European vs. US shale gas reserves, and break-even price ($/mmbtu) The overproduction brings prices down Both the EU and Asia want lower prices Producing more shale will add to over supply But is it the best way to get lower prices? LNG globally has similar effects Still many wanting to invest How low can they go? Source: INSEAD, 2013 Impressive gain in well productivity Marcellus (USA) getting better flows in the initial month But quick fall, too! Capital intensive, need to drill new wells continuously to sustain flow rates Expensive, outside of sweet spots Page 14

15 Unit costs assumed Is the supply-cost curve really key for gas pricing? Gas costs and prices vary FLNG EU ex storage/ peak price EU wholesale gas price Far pipeline imports Conventional LNG import European shale? Near pipeline imports US gas price US Shale Own, conventional production Volume Page 15

16 Unit price Should sellers focus more on willingness to pay? Assumed demand curve generic retail Transportation Distribution Source: EIA, AEO 2013, Reference case Electricity Volume Nationwide average fuel price in US $/mmbtu $/DGE* LNG** 24,82 3,19 CNG 18,21 2,34 Gasoline 31,13 4,01 Diesel 30,99 3,99 Source: US DoE: Alternative fuel price report, April 2013 * DGE Diesel Gallon Equivalent ** Data from 10 LNG filling stations Some segments could pay more, but have less volume Page 16

17 Store forskjeller mellom engros og sluttbrukerprisene Gass til transport har ofte høyest pris, siden alternativ er oljeprodukter LNG til lastbil fyllestasjon i Nederland: Mer enn 3 ganger høyere TTF-prisen LNG til Viking Grace: Ca. 2 ganger TTF-prisen Men den er allerede konkurransedyktig i de fleste tilfeller Selv med lite utviklet infrastruktur, mangel på transparens og konkurranse Det vil bli stadig bedre, etter hvert som flere ting skal på plass Lovende utviklinger innen småskala LNG i flere dele av EU Stadig mer LNG tilgjengelig ved eksisterende terminaler Break-bulk fra både store og små mottaksterminaler Zeebrugge, Gate, Nynäshamn, Øra, Lysekil mm. Mange havn i Nord- og Østersjøområdet vil tilby infrastruktur for LNG bunkring men fortsatt en vei å gå Ikke nok mindre LNG-skip som kan hente LNG der den er billigst og levere i hele området mange er chartrede av oligopolleverandører Page 17

18 Meanwhile, in Norway somewhat stuck in the past Little focus on growing competition from other gas sources Shale, Russia, LNG, even biogas Strong belief in own brand of «reliable gas» Less proven, and less important with commoditisation Little focus on other markets for gas Transportation (especially ships), own industry (ambivalence) More import of gas to Norway from continent expected still below Sweden Next stage of exports from Barents Sea if so, when? Many of the potential investors, like Statoil and Total, busy other places, too Pipeline just got less likely with 90% reduction in tariffs Little direction for future or updating of assumptions Still closed/ secret world in Norway, while others are open/ transparent Little dialogue with market players and clarity in owner preferences Gas almost not visible part of public debate (even at elections) Page 18

19 Flere muligheter fremover Infrastruktur for LNG Det kommer gradvis nå foreløpig uklart hvilke regler som vil gjelde for tredjepartsadgang Mer transparens i prising Gjerne netback fra kontinentet til Kårstø (pris minus transport) Ikke norsk spotmarked med det samme Klar regulering Lettere å investere med kjente betingelser Særlig dårlig med ulik behandling av LPG og gass som råstoff Standardkontrakter for LNG-salg til skip Lettere or mulige brukere å vurdere med kjente priselementer Kortere ledetid i forhandling og signering Økt fleksibilitet og lavere fastprisledd (med bedre infrastruktur) Page 19

20 We are happy to discuss further! We offer strategic and commercial advice + partner selection Producers, TSOs, large buyers, governments Gas, electricity, environment and more Selected recent work Expert report on changes to pricing of Norwegian gas to Germany (price level and mechanism) Sourcing LNG for countries and end-users (even shipping) Dragoş Tȃlvescu dragos@sundenergy.com Meltzersgate 4 N-0257 Oslo Norway Page 20