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7th Doha Natural Gas Conference

and Exhibition
Doha, March 9th -12th 2009

What Will Be the Impact of Qatar’s Six


Mega-Trains on the Global LNG Market?

Andy Flower
Independent Consultant

LNG
LNG in 2008
• Global LNG trade fell marginally in 2008, the
first fall since 1980 & 1981
• The problem was on the supply side with only
5 of the 15 exporting countries increasing
their exports
• The reasons for the lower than expected
outcome include
– Shortage of Gas Supply: e.g. Nigeria, Indonesia,
Oman, Egypt
– Force Majeure: e.g. Nigeria, Algeria
– Technical Problems: e.g. Norway, Australia NWS
Train 5
– Delays in Start-up: e.g. Qatargas II Train 1,
Indonesia (Tangguh), Sakhalin
LNG
LNG Trade by Exporter 1964 – 2008
200

Norway
Equatorial Guniea
160 Egypt
Oman
Nigeria
Trinidad
120 Qatar
Australia
Malaysia
in mtpa

Abu Dhabi
Indonesia
80
Brunei 7.4%pa
Libya
USA - Alaska
Algeria
40

0
1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

LNG
Outlook for LNG Supply 2009 to 2012
• 95.3mtpa of new production capacity now under
construction scheduled to come on stream between 2009
and 2012
Qatar 46.8mtpa
Indonesia 7.6mtpa
Russia 9.6mtpa
Yemen 6.7mtpa
Malaysia 1.5mtpa
Peru 4.4mtpa
Australia 4.3mtpa
Angola 5.2mtpa
Algeria 9.2mtpa
LNG
Global LNG Supply from Plants in Operation and
Under Construction in January 2009
300

11.9%pa
200
in mtpa
In mtpa

100

0
07

08

09

10

11

12
20

20

20

20

20

20
Pacific Basin Middle East Atlantic Basin

LNG
Firm and Flexible Markets for LNG
• Firm
– Markets which have to have the LNG supply and will pay the
price needed to secure cargoes
– Asia, southern Europe (Turkey, Spain, southern France,
Portugal), Latin America, Caribbean, New England (USA)
• Flexible
– Markets with alternative pipeline gas supplies where price will
determine whether LNG is imported
– USA (Gulf of Mexico, West Coast), UK, Belgium, Netherlands

LNG
LNG Demand Outlook 2009-2012

• The increase in supply comes at a time


when demand is weakening in most of
the firm LNG markets
– Asian imports in 4Q08 down 5% compared
with 4Q07 (and lower than 3Q08)
– Imports in firm European markets up by
14% in 1H08 (compared with 1H07),
unchanged between 2H07 and 2H08
– Main increase in imports into firm markets
in the 2H08 has been in the new markets
in the Americas (Argentina and Mexico)
LNG
Short-term Cargoes from the Atlantic Basin
Received by Asian Buyers in 2007 to
1Q2009
5

2
In mt

0
07

07

07

07

08

08

08

08

)
(e
1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

09
1Q
Korea Japan Taiwan India China Total Asia

LNG
LNG Demand in Firm Markets and Global Supply
2007-2012
300
Available for
Flexible Markets
200
in mtpa
In mtpa

100

0
07

08

09

10

11

12
20

20
20

20

20

Asia Europe Americas 20 Supply

LNG
Natural
Natural Gas,
Gas, LNG
LNG and
and Crude
Crude Oil
Oil Prices
Prices
Jan
Jan 2008
2008 to
to Dec
Dec 2010
2010
25 Actual Outlook at $50/Bbl

20

15
In $/MMBtu

10

0
Ju 8

Ju 9

Ju 0
Se 8

Se 09

Se 10
M 08

Ja 8
M 9

Ja 9
M 0

10
M 8

M 09

M 10
No 08

No 9

No 10
-0

-0

-1
0

1
0

0
l-0
-0

0
l-

l-
n-

n-

n-
v-

v-

v-
-

-
p-

p-

p-
ay

ay

ay
ar

ar

ar
Ja

US (Henry Hub) Spain Japan Brent UK-NBP

LNG
The Importance of Qatar – Incremental
Liquefaction Capacity 2008-2012
100

80

60

40
in mtpa

20

0
2009 2010 2011 2012

Qatar Rest of the World

LNG
Which Countries Will be the Drivers of
Supply Growth from 2013
• It takes at least 48 months to construct a new
onshore liquefaction plant
• Projects which have not yet taken a Final
Investment Decision (FID) can not start-up
before 2013
• Over 270mtpa of new capacity at the planning
stage to add to the close to 300mtpa in
operation or under construction
• Over 70% of the planned capacity is in four
countries: Australia, Nigeria, Iran and Russia

LNG
Impact of “Credit Crisis”
• Industry in “wait and see” mode
• Reductions in commodity prices have not yet
fed through to liquefaction plant costs
• Availability of credit not yet tested
• General view is that credit will be available for
“good” projects but financiers will be more
risk averse
– Proven rather than new technology
– Financially strong partners
– Creditworthy buyers
• Potential for FIDs to be delayed in the hope
that the outlook will become less uncertain

LNG
Global LNG Supply 2007 to 2020
500
Average Annual Growth
400 1980-2008 7.4%
2008-2012 11.9%
300
2012-2020 5.0%
200
in mtpa

100

0
07

08

09

10

11

12

13

14

15

16

17

18

19

10
20

20
20

20

20

20

20

20

20

20

20

20

20

20
In O p e ra tio n in J a n 2 0 0 9 Un d e r C o n s tru c tio n in J a n 2 0 0P9 la n n e d

LNG
Possible Global LNG Supply and Demand
2007 to 2020
600

500 Possible Shortfall


400 120mtpa in 2020
300
in mtpa

200

100

0
08

09

12

16

19

20
07

10

11

13

14

15

17

18
20

20

20

20

20

20

20

20

20

20

20

20

20

20
In O peration in Jan 2009 Under Construction in Jan 2009
Planned Forecast Demand

LNG
LNG

LNG