Malaysia LNG Outlook Subbu Bettadapura Director, Energy & Power Systems Asia Pacific 25 th October 2011 LNG Carriers Conference Seoul
Understanding LNG Demand Table of Contents Malaysia LNG Outlook Technology developments and shipping companies’ preferences Investments on LNG Infrastructure 1 2 3
Understanding LNG Demand Malaysia – Natural Gas Production and Consumption 1 Natural Gas Domestic Production and Consumption BCM Source: Frost & Sullivan 66.5 35.7
Understanding LNG Demand Malaysia - Natural Gas Reserves 1 Petronas and PSC Partners participate in upstream operations 38 Gas Producing Fields Deepwater fields to be developed Source: Petronas TCF East Coast of Peninsular Malaysia Offshore Sarawak Offshore Sabah Associated Natural Gas 8.4 3.4 1.3 Non-Associated 25.2 37.5 6.7 Total 33.6 40.9 8.0
Understanding LNG Demand Setting the Stage for Competitive Gas Supply Market 1 Midstream Participants Downstream Participants
With the construction of regasification terminals, Petronas is setting the stage for other suppliers to penetrate the monopoly market
Any party can bring in LNG and supply gas to Tenaga Nasional Bhd or other customers
LNG Complex LNG Export Terminal Peninsular Gas Pipeline System Petronas subsidiaries and JV Partners Petronas Gas Bhd (PGB) and Gas Malaysia Bhd (GMB) Petronas to maintain its export contracts to the Far East. Infrastructure Outlook Gas pipelines Gas Supply in 2010 Source: Petronas, Frost & Sullivan MMScfD 2010 PGB 2178 GMB 315 Total 2493
Understanding LNG Demand Gas Consumption by End Users 1 Gas Consumption by End Users, Malaysia (2010) Total Consumption: 35.7 BCM Source: Suruhanjaya Tenaga
Understanding LNG Demand Gas Consumption: Power Sector 1 Power Generation Fuel Mix
Government's move to diversify fuel mix and reliance on coal
Increase in share of coal
Decrease in share of gas
74% 45% Source: Gas Malaysia %
Understanding LNG Demand Industrial Consumption: Industry locations are near the gas pipeline 1 Source: Gas Malaysia & Frost & Sullivan Gebeng Kedah 26 Industrial Estates Palau Pinang 13 Industrial Estates Selangor 29 Industrial Estates Federal Territory 23 Industrial Estates Negeri Sambilan 17 Industrial Estates Melaka 17 Industrial Estates Perak 33 Industrial Estates Pahang 18 Industrial Estates Terengganu 21 Industrial Estates Kelantan 8 Industrial Estates Johor 31 Industrial Estates Perlis 5 Industrial Estates Malaysian Rain Forest dominates internal regions
Understanding LNG Demand The Malaysian industrial estates contain all industry sectors and there are limited specific industry clusters – all clusters are close to gas pipeline 1 Key to location of “clusters”: Cement Iron & Steel Petrochemical Fertilisers Rubber Glass Ceramics Food Paper & Wood Chemor Ceramic Park, Perak Foundry Park, Perak Furniture Village Perak Tanjung-Langsat Petrochemical and Steel Complex Gebeng Petrochemical Complex Kertih Petrochemical Complex Proposed Halal Food Industrial Park Kedah Rubber Industrial Area, Gombak Petronas Fertilizer Complex Source: Gas Malaysia & Frost & Sullivan
Understanding LNG Demand Subsidies to be eventually removed for Power and Industrial consumers 1
The electric utilities and industries in Peninsular Malaysia are likely to pay market prices for LNG imports
Source: Petronas Gas Subsidy (in US$ Billion) FY 2010 FY 2009 % Change Cumulative Subsidy since 1997 Power Sector 3.7 4.2 (11.8%) 28.4 TNB 1.6 1.8 (7.4%) 12.2 Independent Power Producers (IPP) 2.0 2.4 (15.1%) 16.2 Non Power Sector – Including small industrial, commercial, residential users and NGV 2.5 2.2 +13.2% 9.8 Total Gas Subsidy 6.2 6.4 (3.1%) 38.2
Understanding LNG Demand Natural Gas Production and Consumption Forecast 1 BCM Production and Consumption Forecast Production expected to reach 88.5 BCM by 2020 Consumption expected to be 52.3 BCM in 2020 Source: Frost & Sullivan 88.5 52.3
Understanding LNG Demand LNG Exports 1 MMTPA LNG Exports from Malaysia, MMTPA (2010) Total Exports: 23.13 MMTPA LNG Exports from Malaysia, MMTPA (2009) Total Exports: 22.61 MMTPA Source: Petronas
Understanding LNG Demand LNG Exports Forecast 1 MMTPA LNG export forecast to be 26 MMTPA in 2020. Capacity expansion forecast due to increased production from deep water fields and development of associated infrastructure. Some of the infrastructure development includes: Sabah Oil and Gas Terminal (SOGT) and Sabah-Sarawak Gas Pipeline (SSGP) The 500km SSGP will transport gas from the SOGT in Kimanis to Bintulu for processing into LNG at the PETRONAS LNG Complex for export. The pipeline system also has provisions for future domestic consumption in Sabah and Sarawak. Source: Frost & Sullivan 26.0 23.1
Petronas has a 27.5% stake in the Santos-led coalseam gas-based Gladstone LNG project in the eastern Australian state of Queensland and has a 20-year contract to buy 3.5 million mt/year of LNG from the project
Petronas has signed a contract with France's GDF Suez for the supply of 2.5 million mt of LNG over three-and-a-half years. Shipments will start from August 2012
Qatargas has signed an agreement with Petronas to supply the Malaysian company with 1.5 million mt/year of LNG, under a long-term contract. The agreement is for 20 years, with the first LNG cargo to be delivered in 2013.
Investments on LNG Infrastructure Existing LNG Infrastructure 2 Petronas LNG Complex, Bintulu, Sarawak Three LNG Plants
All modules are based on the propane precooled mixed refrigerant process utilising the Air Products & Chemicals Inc. (APCI) main cryogenic heat exchanger (MCHE)
MLNG, completed in 1980, uses steam turbine drivers for the main refrigerant compressors, and sea water cooling
MLNG Dua, completed in 1995, uses gas turbine drivers for the main refrigerant compressors, and hybrid sea water and air cooling.
MLNG Tiga, completed in 2004, uses gas turbine drivers for the main refrigerant compressors, and air cooling. The facilities share common LNG rundown, storage tank and export facilities.
The Petronas LNG complex, including power generation and utilities systems, is run by MLNG as an integrated facility.
MLNG Dua capacity increased by 1MTPA in 2010 by de-bottlenecking.
Increased production achieved by the up-rating of power available to the main refrigeration C3 and MCR systems and the addition of a new end flash unit
One LNG Export Terminal: MLNG Dua Terminal Source: MLNG, Petronas Module Original LNG Design Production Capacity (MTPA) MLNG 3 Nos (module 1, 2 & 3) 8.4 MLNG Dua 3 Nos (Module 4, 5, 6) 7.8 MLNG Tiga 2 Nos (Module 7 & 8) 6.8
Investments on LNG Infrastructure Existing LNG Infrastructure 2 LNG Complex: Designer and Contractor Details MLNG Tiga The MLNG Tiga Plant's EPCC Contractor comprised Consortium members JGC Corporation (JGC), Kellogg Brown & Root, Inc (KBR), Sime Engineering Sdn Bhd (Sime), JGC (M) Sdn Bhd (JMSB) and Kellogg (M) Sdn Bhd (KMSB). MLNG Dua For the MLNG Dua plant, the project specification was prepared by the same technical consultant, incorporating the latest development concepts and improvement based on the experience gained from other LNG plants worldwide. The construction was undertaken by a consortium of companies comprising JGC Corporation, MW Kellogg Co, Sime Engineering Sdn Bhd, JGC (M) Sdn Bhd and Kellogg (M) Sdn Bhd. Malaysia LNG The MLNG plant was designed by Shell Internationale Petroleum Maatschappij (SIPM), the technical services consultant for the project; and constructed by a consortium comprising JGC Corporation of Japan and Kellogg Overseas Construction Corporation/Pullman Kellogg of the United States of America Source: MLNG, Petronas
Investments on LNG Infrastructure Malacca LNG Import Terminal – Under Construction 2 Project Owner: Petronas Gas Bhd Project Status: Execution Project Value: US$ 952 million Project Completion date: Q3 2012
MISC LNG Carrier Tenaga Satu being converted by MMHE, Malaysia
MISC LNG Carrier Tenaga Empat being converted by Keppel Shipyard, Singapore
EPCIC Contract for the LNG Regasification Unit, Island Berth and Subsea Pipeline awarded in Jan 2011 to a consortium of Perunding Ranhill Worley Sdn Bhd and Muhiubbah Engineering (M) Sdn Bhd The contract is valued at US$ 352 million with a 70:30 split in favour of Ranhill, the consortium leader The project comprises of: An island jetty and regasification units, as well as subsea and onshore pipelines to transport the regasified LNG to Malaysia's Peninsular Gas Utilization pipeline network The regasification facility will have maximum throughput capacity of 3.8 million mt/year Two floating storage units to receive and store LNG 1 2 Source: Petronas Gas
Second LNG import and regasification facility at Pengerang in the state of Johor
To be owned by Petronas
To be part of Petronas’ US$20 billion Refinery and Petrochemical Integrated Development (Rapid) project.
Onshore facility with 3.8 MMTPA capacity
To be operational by 2016
Source: News Reports
Investments on LNG Infrastructure LNG Shipping Company - MISC Bhd 2 MISC Bhd is a Petronas linked shipping and engineering company The company’s fleet profile as of 1 October 2011. Source: MISC Bhd MISC owns and operates 8% of the global LNG Carriers Fleet (2010) Source: MISC Current Fleet Charter-in Newbuildings LNG Carriers 29 - - Petroleum Tankers 53 30 11 Containerships 16 14 2 Others (Dry Bulk & LPG) 3 1 - Current Facilities New Conversions Offshore Floating Facilities 12 (FSPO 5, FSU 5, MOPU 2) 1 -
Investments on LNG Infrastructure MISC’s LNG Fleet 2 Arranged by Delivery Year – Newest to Oldest Source: MISC Carrier Name Containment System Country of Build Shipbuilder Capacity, m3 Delivery Seri Balquis GT NO 96 Japan Mitsubishi Nagasaki 152,000 Dec-08 Seri Balhaf GT NO 96 Japan Mitsubishi Nagasaki 152,000 Sep-08 Seri Bijaksana GT NO 96 Japan Mitsubishi Nagasaki 152,300 Feb-08 Seri Begawan GT NO 96 Japan Mitsubishi Nagasaki 152,300 Dec-07 Seri Ayu TZ Mk. III Korea Samsung 145,000 Oct-07 Seri Bakti GT NO 96 Japan Mitsubishi Nagasaki 152,300 Apr-07 Seri Angkasa TZ Mk. III Korea Samsung 145,000 Feb-07 Seri Anggun TZ Mk. III Korea Samsung 145,000 Nov-06 Seri Amanah TZ Mk. III Korea Samsung 145,000 Mar-06 Seri Alam TZ Mk. III Korea Samsung 138,000 Oct-05 Puteri Mutiera Satu GT NO 96 Japan Mitsui Chiba 137,100 Apr-05 Puteri Firuz Satu GT NO 96 Japan Mitsubishi Nagasaki 137,100 Sep-04 Puteri Zamrud Satu GT NO 96 Japan Mitsui Chiba 137,100 Jan-04 Puteri Nilam Satu GT NO 96 Japan Mitsubishi Nagasaki 137,100 Sep-03 Puteri Delima Satu GT NO 96 Japan Mitsui Chiba 137,100 Apr-02 Puteri Intan Satu GT NO 96 Japan Mitsubishi Nagasaki 137,100 Dec-01
Investments on LNG Infrastructure MISC’s LNG Fleet 2 MISC has a total of 29 LNG Carriers in its fleet. Of these, two (Tenaga Satu and Tenaga Empat) are being converted to FSUs for the Malacca LNG Terminal Arranged by Delivery Year – Newest to Oldest Source: MISC Carrier Name Containment System Country of Build Shipbuilder Capacity, m3 Delivery Aman Hakata TZ Mk. III Japan NKK Tsu 18,800 Nov-98 Puteri Firuz GT NO 96 France Atlantique 130,405 May-97 Aman Sendai TZ Mk. III Japan NKK Tsu 18,928 May-97 Puteri Zamrud GT NO 96 France Atlantique 130,405 May-96 Puteri Nilam GT NO 96 France Atlantique 130,405 Jun-95 Puteri Delima GT NO 96 France Atlantique 130,405 Jan-95 Puteri Intan GT NO 96 France Atlantique 130,405 Aug-94 Aman Bintulu TZ Mk. III Japan NKK Tsu 18,928 Oct-93 Tenaga Satu GT NO 88 France Dunkerque 130,000 Sep-82 Tenaga Tiga GT NO 88 France Dunkerque 130,000 Dec-81 Tenaga Lima GT NO 88 France La Seyne 130,000 Sep-81 Tenaga Dua GT NO 88 France Dunkerque 130,000 Aug-81 Tenaga Empat GT NO 88 France La Seyne 130,000 Mar-81
Investments on LNG Infrastructure MISC Fleet – By Containment System and Builder 2 MISC Fleet: Containment System (Total 29 LNG Carriers) MISC Fleet: Builder (Total 29 LNG Carriers) Source: MISC
Technology Developments and Shipping Companies Preferences FLNG Development in Malaysia 3
Mustang in joint venture with PETRONAS and MISC to develop FLNG solutions
Objective to develop integrated floating LNG liquefaction, storage, and offloading solutions, using Mustang's LNG Smart liquefaction technologies
The joint venture is owned by Petronas (60%), MISC (30%), and Mustang (10%)
The first project for the joint venture will be the development of the front-end engineering design (FEED) for a floating LNG vessel, to be located offshore Malaysia.
The project is expected to achieve first gas from a floating LNG FPSO facility in 2013.
The joint venture hopes to assist with full project development of gas reserves in Malaysia and other countries worldwide, using floating LNG FPSO solutions. The joint venture will also focus on the adaptation, enhancement, and development of floating LNG technologies, and project implementation.
PETRONAS will provide assistance in gas field sourcing and the marketing of LNG
MISC will provide assistance in LNG shipping fabrication; and
Mustang will provide engineering design, procurement, and project management services related to LNG liquefaction processes and gas pre-treatment for topsides facilities
Source: News Reports
Technology Developments and Shipping Companies Preferences Best in Class LNG Carriers in Qatar Gas’ Fleet 3
Q-Flex and Q-Max LNG Carriers – Each ship has a cargo capacity of between 210,000 and 266,000 cubic metres
These large vessels have many innovative features to maximise cargo deliveries and to ensure the highest levels of safety and reliability.
Among them are:
Membrane type cargo containment system
Twin engines and shafts to ensure maximum propulsion safety and reliability, with reduced environmental footprint
Slow speed diesel engines which are more thermally efficient than steam turbines and therefore burn less fuel, which will produce 30 percent lower overall emissions compared to traditional existing LNG carriers.
Cargo re-liquefaction plants return cargo boil off to the cargo tanks and therefore maximise the cargo outturn at the discharge port.
Underwater coatings using the latest technology silicon anti-fouling system, which not only enhances the speed and performance of the vessel, but is also beneficial to the marine environment since it does not release any biocides into the sea to prevent marine growth on the hull.
Fire fighting specifications include combinations of Hi-Ex foam, Hi-fog water systems and safer and cleaner fire extinguishing agents to eliminate the need for CO 2
Source: Qatar Gas
Technology Developments and Shipping Companies Preferences Next Generation LNG Carrier from Mitsubishi 3 Mitsubishi Heavy Industry has launched “EXTREM”, the next generation Liquefied Natural Gas (LNG) carrier, featuring Moss-type LNG containment system The EXTREM combines the advantages of Moss-type carriers with energy-saving features and higher LNG cargo transport capacity. The EXTREM is a newly developed “Sayanedo” series carrier, featuring a peapod-shaped continuous cover for the Moss spherical tanks which is integrated with the ship’s hull instead of conventional hemispherical cover The new design provides a greater structural efficiency, plus a reduction in size and weight, resulting in improvement in fuel consumption as well as compatibility with LNG terminal and its maintainability. The new design will be used as the hull reinforced material for overall strength on the ship The EXTREM measure 288 m in length , 49.0 m in width, 26.0 m in depth and 11.5 m in draft. The ship has cargo tank capacity of 155,000 m3 using four Moss-type tanks Better compatibility with major terminals in Japan and other countries in view of cargo manifold and gangway landing arrangement. Source: Mitsubishi Heavy Industries
Technology Developments and Shipping Companies Preferences Containment System: Moss Type versus Others 3 LNG Carriers Fleet by Containment System, 2010
Moss containment system leads the LNG carrier market in units of LNG carrier. However, TZ Mark III leads from fleet capacity perspective
In the period 2000 to 2010, about 251 LNG carriers were ordered, out of which membrane containment system accounted for 208 carriers or about 81%
Prior to 2000, majority of LNG carriers built were based on Moss containment system
There are only two LNG carriers with IHI SPB system, however this container system is preferred for LNG FPSO, and LNG carriers for Arctic Ocean route despite its high cost
Source: Frost & Sullivan, Industry Sources Containment System Fleet Capacity, m3 No. of LNG Carriers Moss 14,392,719 108 GT No 96 16,590,390 106 TZ Mark III 16,899,108 102 TZ Mark I 920,211 10 GT No 85 1,016,328 8 GT No 82 410,251 7 GT No 88 916,000 7 CS 1 381,100 3 Esso 82,000 2 IHI SPB 179,760 2 Total 51,787,867 355
Membrane containment system is preferred due to the following benefits over Moss containment system
Less capital investment
Less operating expenditure
The weakness, in GTT is ‘sloshing’. To solve this problem, GTT provides new membrane technology that reduces sloshing
In 2010, only 3 LNG carriers were being built with Moss containment system; All these three were by Kawasaki Heavy Industries (KHI) of Japan
Implication for a related raw material supply industry : Aluminum plate is used only for Moss and SPB containment system, so its demand has gone down considerably. Demand of aluminum plates depend on growth of LNG carriers for Arctic route, and growth of LNG FPSO
Technology Developments and Shipping Companies Preferences Considerable Shift from Moss Containment System to GTT Membrane Containment System LNG Carrier Fleet by Containment System, 2010 LNG Carriers Under Construction by Containment System, 2010 3 Source: Frost & Sullivan
Technology Developments and Shipping Companies Preferences
Selection Criteria for Containment Systems
For LNG ships the choice is largely (if not entirely) driven by economics.
Shipbuilders are generally standardized on a specific containment system (only Mitsubishi and Hyundai presently can offer either MOSS or Mark III Membrane).
The vessel owner will generally go through a tendering process, allowing both MOSS and membrane designs to compete. The shipowner and LNG project company decide on the containment system
For FLNG the owner’s role is more pronounced, though emphasis is still on functional requirements rather than specifying a specific containment system
Selection Criteria for Shipbuilders
Reliability, Past Experience, Price and Payment Terms
Availability of delivery slots is an important factor
The role of shipyards in terms of financing is generally limited.
The development of LNG ship construction in China has been very much government driven, imposing domestic LNG import by Chinese built ships. This has increased the participation of Chinese builders in the market
Selection Criteria for suppliers – Shipbuilders or shipowners decide on supplier
Performance record (quality or products, reliability of supplier, reputation of supplier)
Who decides ?
Purchasing team and design team are involved in selecting suppliers, however, the final decision is made by the purchasing team
For each LNG carrier project, a contract is developed between shipbuilder and supplier; Shipbuilders only procure what is needed for the project and keep inventory to the minimum
Measure and compare performance metrics between peers
Identify steps for improvement
Benchmarking is a well established business improvement tool in the oil and gas process industry
Benchmarking has not yet penetrated the LNG carriers business
LNG carriers fleet is increasing at a rapid pace. New Technology is being adopted
A third party external perspective can provide valuable input to operators
Result: Improved business performance Participants are anonymous and the benchmarking participants are only able to identify their own LNG carrier fleet in comparisons
Operational Performance Metrics:
Health & Safety
Ship Availability & Utilization
Note: Shell Global Solutions developed the pilot benchmarking study for LNG Carriers Source: Frost & Sullivan
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For Additional Information Donna Jeremiah Corporate Communications Asia Pacific +603 6204 5832 [email_address] Carrie Low Corporate Communications Asia Pacific +603 6204 5910 [email_address] Subramanya Bettadapura Director Energy & Power Systems [email_address]