Primary Gas Buyers Move Upstream - Impact on the Gas Trade

Transcription

1 Primary Gas Buyers Move Upstream - Impact on the Gas Trade Nicolas Brizard Consultant, Global Insight European Fuel Price Conference 8 th & 9 th December 2004 Le Meridien Hotel Piccadilly, London

2 Gas Competitor Analysis 2004: company coverage Business models and strategies in liberalizing gas (and power) markets Tier one companies Tier two companies Producers Gas Utilities Power utilities BP, ENI, ExxonMobil, OMV, Shell, Statoil, Total, Gazprom, Sonatrach, Centrica, Gas Natural, Gasunie, Gaz de France, VNG, Wintershall EDF, ENEL, E.ON/Ruhrgas, RWE, SUEZ BG Group plc, ConocoPhillips, Hydro Dong, MOL, PGNiG, SPP Edison, EDP, Eneco, Essent, Nuon, 2

3 Different Activities Along Supply Chain 1. E &P 2. Primary importing/buying Long-term contracts with producers 3. Trading & Risk management 4. Contracting Medium-long term contracts with secondary buyers industrials, retailers 5. Industrial marketing 6. Mass marketing 7. Power generation 3

4 Oil and Gas Producers Pure E&P Seek to monetise gas production at the beach/border Limited trading capabilities Sell via combinations of conventional LT and ST contracts perhaps including spot sales Examples: ExxonMobil, BG Group plc ChevronTexaco, ConocoPhillips, Amerada Hess E&P + downstream Seek to capture as much of the available downstream margin as possible without becoming mass-market retailers Some address only the largest industrials (BP, Statoil); others attack the market more broadly (Total, Shell) Need to develop stronger trading capabilities than pure E&P Examples: BP, Shell, Total, Statoil, OMV, Hydro. Candidates: Gazprom, Sonatrach 4

5 Downstream Gas Companies Gas companies expanding upstream Seek to cover 15% to 25% of demand with equity gas Hedge against price volatility/illiquidity Examples: Centrica, GdF, Dong Candidates: Gas Natural, E.ON/Ruhrgas Gas companies expanding abroad Compensate for loss in domestic market Examples: GdF, RWE. Candidates: Centrica, Gas Natural, ENI/Italgas Gas companies adding power Generation: position in a fast growing market, way to burn gas, coverage of demand. Examples: Gas Natural, Centrica, ENI Mass market: Power more profitable but more difficult. Examples: Centrica, Gas Natural. Candidates: GdF 5

6 Converged Energy Companies Power companies adding gas: Retreat to Energy. Bi-energy model stronger than multi-utility model. Accompanied by a retreat to Europe Gas easier to manage for power companies. Mass market provides dual fuel opportunities CCGT takes company directly into market T&RM capability applicable to both fuels Former would-be multi utilities: E.ON/Ruhrgas, RWE, SUEZ (candidate) Power incumbents: Enel, EDF, EDP Marketers buying (mostly) wholesale Specialist retailers who rely upon wholesale transactions for their supply. Model sensitive to high wholesale prices Only viable where there is good wholesale liquidity (UK) or is a tradition. Strong trading operations needed. Examples: Nuon, Essent, Eneco, RWE (part) 6

7 Vertical integration a model favoured at home and abroad Centrica Rough UK GERMANY NETHER- LANDS BELGIUM FRANCE ITALY SPAIN Other European countries Luminus Luseo Ireland Gaz de France (Norway) Atlantic LNG market Hungary Gas Natural soon soon soon Plans (Enagas) Atlantic LNG market Suez / Distrigaz LNG Atlantic LNG market ENI/Italgas Hunhary Portugal Some activity Significant Eminent player E&P Primary importing Trading Copyright 2004 Global Contracting Insight, Inc. Industrial Marketing Mass Marketing Own power Infrastructure 7

8 Implications for Gas Trade Vertical (& Horizontal) Integration seen by gas companies as a way to increase buying power in face of producers/exporters Takes volumes of gas out of mainstream trade Directionally weakens power of large producers Threat to oil-price indexation? Secures LT requirements Buyers will want slightly shorter term contracts ie years rather than 15+ 8

9 Contact Details Thank you! Nicolas Brizard Consultant, Advisory Services Division E: 9