The current business context and future role of LNG in Europe. Ulco Vermeulen Executive Director Participations and Business Development

Transcription

1 The current business context and future role of LNG in Europe Ulco Vermeulen Executive Director Participations and Business Development EBC, Amsterdam, 31 May 2013

2 Agenda 1 Current situation LNG market 2 The dynamic business context of LNG 3 Exploring the future for LNG in NW Europe -2-

3 Dynamism in gas price development World LNG Estimated May 2013 Landed Prices (USD) UK Korea Cove Point 4.16 Altamira 4.42 Lake Charles 3.79 Spain Belgium India China Japan Rio de Janeiro Bahia Blanca

4 LNG business environment: dynamism is a characteristic (1) Eemshaven Liongas Gate terminal Past Diversification and security of supply is key concern Few years ago: fierce competition for terminals: Eemshaven, Liongas, -5-

5 LNG business environment: dynamism is a characteristic (2) Presen t Fukushima: Japan LNG prices up shale gas forces cheap coal towards European power generation surplus subsidized sustainable power Germany puts pressure on power price economic situation in Europe Past Diversification and security of supply is key concern Fierce competition for terminals: Eemshaven, Liongas, -6-

6 LNG business environment: dynamism is a characteristic (3) Future effects of liquefaction projects all over the world uncertainty dynamism and new markets! 25% liquefaction capacity increase LNG liquefaction capacity United States Russia Other Africa Angola Algeria Norway Presen t Past +100 BCM in 4 years Fukushima: Japan LNG prices 20-30% 200 up shale gas forces cheap coal towards European power generation surplus subsidized sustainable 100 power Germany puts pressure on power price Economic situation in Europe Source: IEA Diversification and security of supply is key concern Will impact current supply shortage Fierce competition for terminals: Eemshaven, Liongas, Shift from Middle East to Australia enlarges availability of LNG for Europe Latin America Other ME Qatar Other Asia Pacific Papua New Guinea Indonesia Australia -7-

7 LNG, the next step Challenging but high potential Diesel market Europe: 200 bcm gas equivalent Bunker market: 50 bcm gas equivalent End User Customer Trucks 50 m 3 LNG vessels 5,000 10,000 m 3 Niche LNG Industrials Local gas distribution companies Power plants LNG as fuel Shipping companies Trucking companies Pipeline 8

8 Price of LNG compared to current fuel market Market for road and shipping fuels provides opportunities for sound LNG business: cleaner and cheaper 30 USD per mbtu 25 Gasoil 20 60% difference LNG 5 0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Bloomberg 380 bunker fuel spot Rotterdam Bloomberg 180 bunker fuel spot Rotterdam Bloomberg Gasoil 0.1% CIF NWE spot LNG spot cargoes NWE Source: Bloomberg 9

9 Sulphur Emission Control Area: emerging market for LNG in North-West Europe Binding legal obligations: for all marine fuels used by all ships in the SECA area as of 1/1/2015 International Maritime Organization (MARPOL Treaty, Annex VI) European Union (Sulphur Directive 2012/33/EU) -10-

10 The power of LNG as an alternative fuel Three solutions are available to meet SECA requirements: Use 0,1% sulphur fuel (diesel) Use > 0,1% sulphur fuel (IFO/HFO) with scrubber Switch to LNG No modifications required High operational (fuel) cost Will significantly increase diesel demand & price Low cost fuel Scrubber investment needed Technology not proven Waste water Low cost fuel Technology proven Meets future NOx criteria as well Switching investment needed LNG market new for participants -11-

11 A Revolution in Shipping: a Grand Slam for LNG * Low sulphur fuel contains maximum 0.1% sulphur ** Conventional fuel as per 1 July 2010, containing maximum 1% sulphur -12-

12 LNG for vessels and trucks is part of Dutch green deal policy Dutch Green Deal: companies take initiatives climate and environment objectives cleaner transport sector: license to grow target: at least 50 barges, 50 seagoing vessels and 500 trucks on LNG by

13 To conclude Current situation of LNG in Europe is part of a bigger picture of LNG dynamism New markets ahead: small scale definitely emerging -14-