Nagoya October 18, 2018 - IEEJPEGN PSV ZTP GASPOOL NCG 4 Data color order: Complimentary colors: Footer : Never change the footer text on individual slides. Change, turn on or off

EU/METI LNG workshop #4Francis Browne

Editorial Director

Price Group

NagoyaOctober 18, 2018

2

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But interest on other European markets has grown rapidly over

the past years…

* 2018 extrapolated from 2018 YTD volumes

** Other European Hub include NCG, GPL, PEGN, TRS, ZTP, AUS VTP, PSV, PVB, OTE, SLK , POL VTP, MGP

0

5,000

10,000

15,000

20,000

25,000

30,000

2011 2012 2013 2014 2015 2016 2017 2018**

TW

h

Volumes Traded OTC and Exchange

NBP TTF Other European Hubs

3


0%

40%

80%

120%

160%

PS

V

PV

B

TT

F

GP

L

PE

GN

NC

G

ZT

P

CE

GH

TR

S

NB

Pavera

ge

y-o

-y %

in

cre

as

e

y-o-y % increase from 2011* to 2016

… With a large increase on all continental hubs…

* 2018 extrapolated from 2018 YTD volumes (Jan-Aug)

** Other European Hub include SLK, OTE. HUN, POL VTP

* vs 2012 for Italy and Spain, vs 2013 for CEGH, vs 2014 for ZTP

Source: LEBA, TSOs

0

2,000

4,000

6,000

8,000

10,000

2011

2012

2013

2014

2015

2016

2017

2018**

TW

h

OTC and Exchange Volumes Traded

TRS

Other EU**

PVB

CEGH

PEGN

PSV

ZTP

GASPOOL

NCG

4


Platts has historically been focusing on forecasting activity on short and long term for most liquid markets

Source: Oxford Institute for Energy Studies

5


.. Where most volumes traded are spot

0%

20%

40%

60%

80%

100%

NB

P

TT

F

AU

S V

TP

PV

B

PS

V

ZE

E/Z

TP

GP

L

NC

G

PE

GN

TR

S

OT

E

Product split for 2016 total volume traded

Year

Seasons

Quarter

Month

Spot/Prompt

Mature ; Active; Poor; Inactive

Source: Oxford Institute for Energy Studies

6


What role will European hubs play as global LNG supplies

increase over the next two years?

1. Act as differentials to other global hubs (HH/JKM) reacting to the global balance

2. Price independently, connecting with the global market on the back of a regional demand and supply balance

3. Become a key benchmark for spot and contract LNG looking for flexibility in a liquid hub

4. Act as a sink for an over-supplied global LNG market

7


JKM is breaking out to historical new highs?

0

2

4

6

8

10

12

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

US

D/M

MB

tu

JKM Spot Prices

2015 2016 2017 2018

8


Maybe not so much from a historical perspective

0

2

4

6

8

10

12

14

16

18

20


US

D/M

MB

tu

JKM Spot Prices Since ‘09

Range 2018 Average

9


Actually, when one looks versus oil – LNG’s key price setter –

the market is incredibly strong

4%

6%

8%

10%

12%

14%

16%

18%


%

JKM slope vs. 3-month Brent

Range 2018 Brent Equivalent Average

10


Supply weakness has been driving price strength this summer

0

50

100

150

200

250

201

8/5

/1

201

8/5

/8

2018/5

/15

201

8/5

/22

201

8/5

/29

2018/6

/5

201

8/6

/12

201

8/6

/19

2018/6

/26

201

8/7

/3

201

8/7

/10

2018/7

/17

201

8/7

/24

201

8/7

/31

201

8/8

/7

201

8/8

/14

201

8/8

/21

201

8/8

/28

201

8/9

/4

201

8/9

/11

201

8/9

/18

Mcm

/d

Global Tanker Loadings Y/Y

11


Supply weakness has been driving price strength this summer

-25%

-15%

-5%

5%

15%

25%

35%

45%0

50

100

150

200

250

201

8/5

/1

201

8/5

/8

2018/5

/15

201

8/5

/22

201

8/5

/29

2018/6

/5

201

8/6

/12

201

8/6

/19

2018/6

/26

201

8/7

/3

201

8/7

/10

2018/7

/17

201

8/7

/24

201

8/7

/31

201

8/8

/7

201

8/8

/14

201

8/8

/21

201

8/8

/28

201

8/9

/4

201

8/9

/11

201

8/9

/18

%

Mcm

/d

Global Tanker Loadings Y/Y JKM Spot M/M

12


Higher Asian pricing and Asian premiums over NW Europe have

led to increased reloads from Europe…but beware shipping

0

5

10

15

20

25

30

35

40

45

50

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Mcm

/d o

f E

uro

pean

Relo

ad

s

JK

M/T

TF

Sp

read

($/M

mb

tu)

European Reloads JKM-TTF Spread

13


TTF and JKM relationship most relevant in summer, Brent

remains main driver for LNG

R² = 0.7084

R² = 0.3425

0

2

4

6

8

10

12

14

0 5 10 15

$/M

MB

tu (

JK

M)

$/MMBtu (TTF)

TTF versus JKM

Summer Winter Summer Trend Winter Trend

R² = 0.5689

R² = 0.6667

0

2

4

6

8

10

12

14

0 20 40 60 80

$/M

MB

tu (

JK

M)

$/Barrel (Brent)

Brent versus JKM

Summer Winter Summer Trend Winter Trend

14


JKM expected to stay strong through this winter as Northeast

Asian demand picks up seasonally

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

-200

-150

-100

-50

0

50

100

150

$/M

MB

tu

Mcm

/d

M-o-m Change in NE Asian Demand JKM

15


While we forecast JKM to eclipse 12$ this winter we are not

bullish

0

2

4

6

8

10

12

14

$/M

MB

tu

JKM Henry Hub TTF Forecast HH Forecast TTF Forecast JKM

16


Paper/derivative market for JKM continues to grow

17


Interaction with other energy hubs, JKM reflects sea borne LNG

delivered North East Asia

NBP/ TTF

Brent/ JCC

Henry Hub

NE Asian demand (Power/Heating)

Platts JKMSpot demand and availability

18


Approved companies in MOC counter-party review process so far

Source: Platts

19


Bids

Bids , offers & trades for physical cargoes and swaps converge and demonstrate JKM value

Offers

Price convergence &

demonstration of JKM

value

MOC pricing period

Incremental price change

of 1-5 cents/MMBtu every 2

minutes

Reasonable bids &

offersPri

ce

Time

Intraday

values@

3pm SGT

4pm 4.30pm

20


0

1

2

3

4

5

6

7

8

13-Jun 20-Jun 27-Jun 4-Jul 11-Jul 18-Jul 25-Jul 1-Aug 8-Aug 15-Aug 22-Aug 29-Aug 5-Sep 12-Sep 19-Sep 26-Sep 3-Oct 10-Oct

20

Growth of LNG MOC information (June 13 to October 10, 2018)

97 bids, offers and trades

so far

Source: Platts

21


Hierarchy of assessment data quality

21

• Published live through Platts’ systems

• These take precedence over other

non-window information as value at a

given time can be determined.

• Communicated via IM, phone or email, Platts

seeks to verify this information with market

participants throughout the day

• This information can be used alongside other

influencing factors, such as oil and gas prices,

to determine the assessment.

• Notional prices only give an

indicative value

• Can be disregarded in the case

of differing influencing factors

such as oil and gas price

movements or other supply and

demand fundamentals

Firm,

transparent &

detailed bids/offers

Trades, bids and offers verified and

corroborated by market participants

Notional prices, previous trades, tender results

Firm MOC @ 4.00pm to

4.30pm

Intra-day values @

3pm

22


Rise of the non utility buyer

23


LTC terms and project financing is changing

24


24

Access Global LNG Special Report on:

www.platts.com/lng-report

We welcome your feedback

[email protected]

[email protected]

mailto:[email protected]

mailto:[email protected]

Documents

Nagoya October 18, 2018 - IEEJPEGN PSV ZTP GASPOOL NCG 4 Data color order: Complimentary colors: Footer : Never change the footer text on individual slides. Change, turn on or off