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24 April 2012
GAZPROM G4TLNG bunker supply and infrastructure development by Gazprom
2
Overview
1. European gas market fundamentals
2. LNG bunker fuel – potential in North / Baltic Sea ECA
3. Gazprom – core supplier of LNG fuel to ECA 1 customers in future
4. Q&A
3
1. European Gas Market
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European natural gas demand and supply
Substantial share of Russian gas approx. ~30 %
LNG supplies to Europe have been dropping since May 2011 due to a more attractive Asian markets
European gas production reached its plateau and expected to decline over the next decade
Example: production in Holland expected to drop by ~30% by 2020 compare to 2012
Source: GM&T Commercial Analytics
* Average over past 3 years
* Countries taken into account : France, Belgium, Holland, Germany
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Oil Linked and Hub Based Natural Gas Pricing
Russia(European part)
Estonia
Latvia
Lithuania
(to Russia)Denmark
Norway
Sweden
Finland
Austria
SloveniaCroatia
Macedonia
Albania Turkey
Romania
Bulgaria
Moldova
Ukraine
Hungary
SlovakiaCzech Rep.
Poland
Belarus
Bosnia andHerzegovina
Serbia
Andorra Italy
France Switzerland
FYR
Germany
Netherlands
Luxembourg
SpainPortugal
GreatBritain
Ireland
Greece
CyprusMalta
Montenegro
Existing
Under Construction / Planned
ZEEBRUGGEBelgium
FOS CAVAOU &FAS SUR MER
MONTOIR DE BRETAGNE
REVITHOUSSA
GNL ITALIA
TERMINALE GNL ADRIATICO
GATE
OLT OFFSHORE LNG TOSCANA
NUOVE ENERGIE
TEESSIDE GASPORT
ALIAGA LNGBARCELONA
SINES LNG
POLSKIE LNG
SAGGAS LNG
HUELVA
EL FERROL LNG
CARTAGENA
BILBAO
SOUTH HOOK LNG
GRAIN LNG
DRAGON LNG
MARMARA EREGLISI
NYNASHAMN
NAANTALI PORVOO
WILHELMSHAVEN
Existing and Proposed LNG Regasification Terminals :
Hub / Market Based
Oil Linked
Average European Oil- Indexed Gas Price = 13 $/mmBtu LSFO 1% 380cs ARA FOB = 19.5 $/mmBtuLSGO 0.1% ARA FOB = 25.9 $/mmBtu
* Prices as of 18th April 2012
Klaipeda
INKOO
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Key Factors Affecting Gas Markets in Europe
Source: www.bafa.de, Argus Gas
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2. LNG bunker fuel – potential in North/ Baltic Sea ECA
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Emission Control Zones
• SOx – 0.1% from 1st Jan 2015• NOx – by 80% from Tier I levels in ECAs, and by 20% for Tier II (global) compliance
ECA Zone 1 – Is the most promising opportunity
Imperative – to upgrade marine transport to cleaner fuel in Europe so that to enhance the global evolution of the shipping industry
ECA 2
ECA 1
ECA 3
ECA 4
Caribbean ECA
Singapore Green Initiative, Hong Kong’s Fair Winds Charter
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LNG bunker demand potential in ECA 1Demand for LNG bunkering will be driven by relative cost to traditional marine fuels
• Total bunker fuel demand depends on economic growth patterns and type of vessel e.g.Cargo: - GDP and manufacturingPassenger: - Travel and tourism
• LNG bunker fuel demand, as part of total bunker fuel demand, will be determined regionally by: - Relative price levels with traditional marine fuels (HFO, MGO)- ECA or other ship emissions controls- LNG fuel and infrastructure availability- Composition of ship traffic- NOx scrubbing and NOx adsorption traps (not widely accepted)
• LNG demand may exceed 20 mtpa after 2025
Scenario Analysis of LNG Bunker Demand in the Baltic / North Sea 2011-2030
Source: PACE Global
Base Case: LNG $15.73/MMBtu < equivalent HFO price with scrubbers
Case 2: LNG $20.25/MMBtu < MDO equivalent price(LNG supply too costly, sulphur limits only adopted based on regulation)
Case 3: LNG $13.62/MMBtu < HFO equivalent price (LNG heavily incentivized, fuel switch is made based on best economics)
Case 4: LNG $15.73/MMBtu > HFO equivalent price, due to a lagging economy and declining demand.
0
2,000
4,000
6,000
8,000
10,000
12,000
Baltic & North Sea (ECA Zone 1) LNG Bunker Fuel Projection ('000 tonnes)
Base Case Case 2 Case 3 Case 4
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3. Gazprom – core supplier of LNG fuel
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London
Berlin
Paris
Singapore
Manchester
UK/London
T: +44 20 8614 [email protected]
North America/Houston
T: +1 281 404 [email protected]
France/Paris
T: +33 1 42 99 [email protected]
UK/Manchester
T: +44 845 230 [email protected]
Germany/Berlin
T: +44 845 230 [email protected]
Zug
LondonHouston
GM&T Regional Offices
Moscow
Switzerland/Zug
T: +41 417 232 [email protected]
Asia Pacific/Singapore
T: +65 6671 9001
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Global operations from London, Houston, Singapore
Strong global presence, covering all markets
365/24/7 global trading and shipping
Over 7 years of LNG trading operations
Over 6.2 million tonnes of LNG traded
Regas Capacity at Energia Costa Azul
Chartered fleet: 5 vessels
Delivered 100th LNG cargo
79 MSPAs in place
Solid track record of safe LNG operations and trading
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Gazprom’s LNG trading
YearVolume traded,
bcm2005 0.162006 0.442007 0.452008 0.642009 1.842010 2.542011 3.04
Source country
Market country
A Solid Track Record of Delivery
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Sakhalin: Russian strategic LNG projects
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Reserves: 600 bcm of gas, 170 mln tonnes of Crude Oil LNG Plant: 2 x trains producing 9.6 mtpa per annum Project structure:
• Gazprom – 50% +1• Shell – 27.5%• Mitsui –12.5%• Mitsubishi –10%
Cargoes delivered to Japan, Korea, China, India and the Middle East
Sakhalin expansion is being considered
Sakhalin LNG – Gazprom’s first LNG Project
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Shtokman: Russian strategic LNG projects
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Shtokman: Russian strategic LNG projects
Reserves: 3.9 tcm of gas and 53.4 mln tonnes of gas condensate
Development:
• 11 bcma pipe gas by 2016
• 7.5 mtpa of LNG by 2017
• Subsequent phases with growing LNG production
• Up to 37.5 mtpa in 3 phases Upstream development: Gazprom (51%),
Total (25%), Statoil (24%) Marketing: GM&T Target markets in North America, Europe,
India and Mediterranean countries FID expected by July 1st 2012 To be made available for ECA 1 bunkering
customers
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Small to mid scale LNG plants: Russian strategic LNG projects
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Baltic Liquefaction facilities
III
IV
VI
Russia
(European part)Estonia
Latvia
Lithuania
(to Russia)
Denmark
NorwaySweden
Finland
Ukraine
SlovakiaCzech Rep.
Poland
Belarus
Germany
Netherlands
Luxembourg
Belgium
RussiaI - Petrodvorets (8,000 t/y)II – Vyborg (8,000 t/y)III – Kaliningrad 25,000 t/y (planned 100,000 t/y)IV – Kingisepp 7,000 t/y (planned 10,000 t/y)V – Dalnyaya Bay (500,000 t/y)
Under discussionsAdditional supply of up to 1.5 mln tonnes of LNG in total in the Baltic sea region (net of Shtokman)
Skangass
Norway / ScandinaviaSkangass – (300,000 t/y)
FinlandVI – Porvoo site (20,000 t/y)
I
II
Shtokman
V
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Other activities of GM&T
• Development of technical specifications of LNG bunkering vessels (GM&T jointly with SCF and RMRS) - Near completion - Design and construction planned for Q1’13 start • Active involvement in LNG bunkering regulatory work (with RMRS and ABS and via SIGTTO)
• Third party LNG supply for trading volumes up to 2015-2016 - Negotiations with Gazprom and GM&T business partners underway
• Anchor customers to supply LNG from 2013 - negotiations underway with several ship-owners
• Upgrade of GM&T’s LPG coaster fleet (on time-charter) to dual-fuel engines from 2015
• Infrastructure development - seeking partners for storage / hub operators
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Summary
• European gas markets – growing role of exports gas (pipeline and LNG), relevance of oil-indexation and diversity of supply concerns (eg. LNG pulled to Asia) while Russian remains a core reliable supplier
• North / Baltic Sea – potential catalyst of upgrading global merchant fleet to a cleaner more sustainable fuel – LNG
• Gazprom has the unique potential to offer stable LNG supply in ECA 1 starting from 2013 (subject to infrastructure constraints)
• Several projects in the Baltic region– unique opportunity • Gazprom Group is keen to champion this development and welcomes new partnerships and cooperation
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4. Q&A
