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Global lng marketoverview
- 1. Global LNG Market Overview London, 18 March 2014 Andrew Walker – VP Global LNG Methane Shirley Elisabeth LNG vessel
- 2. 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 2012. 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. 2
- 3. 3 •Review of 2013 –Supply –Markets –Trade dynamics –Prices •Outlook for 2014 –Key influences •And beyond …. –When will the current market tightness end? Global LNG market update
- 4. LNG supply by year: 2005 to 2013 4 120 140 160 180 200 220 240 260 2005 2006 2007 2008 2009 2010 2011 2012 2013 mtpa Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
- 5. -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 Nigeria Egypt Norway Indonesia US (Kenai) UAE Russia Algeria Libya EG Brunei T&T Angola Peru Oman Qatar Australia Malaysia Yemen mt Supply by country: 2013 YOY 5 Total = +1.1 mtpa +7.9 mtpa -6.9 mtpa Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes
- 6. Markets: 2013 YOY -5 0 5 Spain UK France USA Turkey Italy India Greece Belgium Canada Kuwait Portugal Chile Netherlands UAE Taiwan Dom Rep Mexico E P Rico Israel Thailand Japan Indonesia Singapore Argentina Malaysia Brazil Mexico W China Korea mt 6 Total = +1.1 mtpa Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes +7.8 China/Korea +5.5 Americas +4.3 Other Asia -16.9 mtpa -4.1 N. Europe -9.6 M. Europe +18.0 mtpa
- 7. LNG trade balance: 2013 vs 2012 -15 -10 -5 0 5 10 15 Supply Asia / M.E. Latin Am. US / Can N. Europe M. Europe mt 7 -$5.00 -$4.00 -$3.00 -$2.00 -$1.00 $0.00 $1.00 $2.00 Asian spot ($/mmBtu) JCC ($/bbl) YOY prices Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes Platts, Petroleum Association of Japan Latin America = Argentina, Brazil, Chile, Mexico, Puerto Rico, Dominican Republic M. Europe = France, Italy, Spain, Portugal, Greece, Turkey
- 8. European LNG imports: 2010 to 2013 0 2 4 6 8 10 12 Jan-10 Jan-11 Jan-12 Jan-13 bcfd Netherlands UK Belgium Turkey Spain Portugal Italy Greece France 8 3-month moving average Main Europe -21.0 North Europe -9.8 Spain France Italy Turkey Portugal Greece United Kingdom Belgium -35 -30 -25 -20 -15 -10 -5 0 5 mt 2013 vs. 2010 Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes Netherlands
- 9. LNG market has tightened 9 Source: 2008-2013: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes *Forecast – BG Group outlook 2013 LNG imports by region 2008-15 (mtpa) 0 50 100 150 200 250 300 2008 2009 2010 2011 2012 2013 2014 2015 Total supply Asia Pacific Europe North America Supply outpacing Asia demand growth Asia demand growth outpacing supply Market loosening Market tightening M. East FORECAST* S.America
- 10. 0 5 10 15 20 25 2008 2009 2010 2011 2012 2013 2014 2015 $/mmbtu Gas and LNG prices 10 Oil parity NBP HH Asia long- term proxy Asia spot Global recession Asia recovery Fukushima earthquake Note: Asia long-term proxy = 14.85% JCC + 0.50 Oil parity = JCC = Japanese average crude price Source: Platts, Heren, Petroleum Association of Japan and Bloomberg (as of Mar 6, 2014)
- 11. 2013: Year in review •Supply –Effectively flat YoY – two new trains had limited impact –Unplanned outages and declines weighed on supply •Markets –Growth & diversification: 10 new terminals & three new markets added –Nuclear impacts in Japan and Korea –Unexpected Latin American demand; Mexican tender and Brazil drought •Trade dynamics –Continued market tightness – Europe the balancing market –Record Atlantic-to-Pacific basin trade flows –European re-exports –Asian 2013 average spot price up nearly $1.00/MMBtu YoY 11
- 12. Global LNG re-exports 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 2008 2009 2010 2011 2012 2013 bcfd Belgium RE Brazil RE France RE Mexico RE Netherlands RE Portugal RE South Korea RE Spain RE US RE Re-exports (mtpa) 2013 4.4 2012 3.5 2011 2.3 2010 1.0 2009 0.2 2008 0.3 Source: BG Group interpretation of IHS Waterborne data (Feb 2014), delivered volumes 12
- 13. Outlook for 2014: key influences •Supply –Timing of Australasian ‘LNG’ wave: PNG and QCLNG start-ups –Angola LNG ramp-up –Overall industry performance: declines and unplanned outages •Markets –Start-up of Japanese nuclear capacity –Chinese gas and LNG demand growth –Latin America: tenders/continued drought •Trade dynamics –European LNG minimum – how low can Europe go? –How much volume will Qatar send to the UK? 13
- 14. Looking beyond 2014 … •When will the current market tightness end? •Supply factors –Ramp-up of Australian supply –Project FIDs for next material wave: US, Canada, Mozambique (In 2013 10 new projects planned FID – one took it) •Market factors –Asia LNG growth (China, south-east Asia, Japan) –New markets: FSRUs are reducing lead-time and cost of access •Trade dynamics –Australia arrests growing tightness – but new supply is required to reverse it –LNG industry likely to be tight through the end of the decade 14
- 15. Summary •What did the market tell us in 2013? –Underlying tightness –Europe the balancing market –Seasonal overlay: weather, storage, market sentiment & foresight –Increasing resilience: surprises are the ‘new normal’ •When will the current tightness end? –Dependent upon timing of new supply vs market growth –New supply will take longer than many envisage –LNG market will remain tighter, for longer than many assume 15