Upstream Investment Trends for Japanese LNG Buyers and Developers

0 Upstream investment trends for Japanese LNG buyers and developers Ryuta KITAMURA JOGMEC International LNG Congress 2016 14th March, 2016 Japan Oil, Gas and Metals National Corporation (JOGMEC) 1 Established: February 29, 2004 [succeeded the functions of Japan National Oil Corporation(JNOC)] President: Keisuke Kuroki Capital: 751 Billion Yen (As of January, 2016) = around 6.83 Billion US$ (110US$/Yen) Mission Securing Stable Supply of Oil, Natural Gas, Coal and Mineral Resources for Japanese Industries and Citizens Activities Oil & Gas Upstream Metals Strategy & Stockpiling Mine Pollution Coal Strategy & Geothermal Investment and Exploration, and Control Exploration, and Resources Research & Development Technology Technological Development Development Support JOGMEC Oil & Gas Upstream Projects (Natural Gas) 2 North Montney Shale Gas Project Horn River Shale Gas Project (Canada) (Canada) Cordova Shale Gas Project Sakhalin I Project (Canada) (Russia) Cutbank Dawson Shale Gas Project (Canada) Rovuma Offshore Area 1 Project Tangguh LNG Project (Mozambique) (Indonesia) PNG LNG Project Block B (Papua New Guinea ) (Vietnam) Abadi LNG Project (Indonesia) Ichthys LNG Project Equity Capital (50) Wheatstone LNG Project (Australia) (Australia) Liability Guarantee (12) (As of Jan, 2015) (Source: JOGMEC) Electricity Mix in Japan 3 10*8kWh No nuclear plant in operation in 2014FY Sendai plant in 29.3 Kyushu has been restarted in Aug. 2015 43.2 42.5 2 reactors in operation (Sendai) and 1 more (Takahama) under 28.6 preparation at the 1.7 0.0 moment Fukushima Daiichi nuclear disaster (Source: The Federation of Electric Power Companies of Japan) LNG Imports in Japan 4 LNG Spot Price in Japan LNG imports at record high trillion Month LNG WTI MMton JPY 2014.03 18.3 100 87.3 87.5 88.5 85.0 78.5 2014.06 13.8 105 70.0 2014.09 13.2 93 2014.12 11.6 59 2015.03 8.0 48 2015.06 7.6 60 2015.09 7.4 45 2015.12 7.4 37 (US$/MMBtu) (US$/bbl) Fukushima Daiichi (Source: MOF Japan) (Source: METI Japan) nuclear disaster Long Term Energy Supply and Demand Outlook 5 (Source: METI Japan, “Long Term Energy Supply and Demand Outlook”, July 2015) Japanese LNG Import Outlook 6 (Source: BREE Resources and Energy Quarterly, Mar 2014) Upstream Investment by Japanese Utility Companies in Australia & PNG 7 Crux Sunrise / Evans Shoal Producing OSAKA GAS OSAKA GAS Stanley OSAKA GAS • Darwin LNG (FID : 2003) (First LNG in 2006) Gorgon LNG OSAKA GAS • Pluto LNG (FID : 2007) (First LNG in 2012) TOKYO GAS Darwin LNG Queensland Curtis LNG CHUBU Electric Ichthys LNG • QC LNG (FID : 2010) TOKYO E/P TOKYO GAS TOKYO GAS (First LNG in 2015) TOKYO GAS OSAKA GAS CHUBU E/P Under Construction Wheatstone LNG Pluto LNG TOHO GAS • Gorgon LNG (FID : 2009) TOKYO E/P TOKYO GAS KANSAI E/P • Wheatstone LNG (FID : 2011) KUSHU E/P KANSAI E/P • Ichthys LNG (FID : 2012) LNG Planning Stage • Sunrise & Evan Shoal • Crux Producing Construction • Stanley Planning (Source: JOGMEC Sydney Office) Upstream Investment by Japanese Utility Companies 8 Snorre Oil Field Barnett (Shale) • Osaka Gas acquired OSAKA GAS TOKYOGAS WI for Sanga-Sanga Block in Indonesia in 1990. Pearsall (Shale) Cordova (Shale) OSAKA GAS TOKYO GAS • Osaka gas invested OSAKA GAS Cove Point LNG in Snorre oil field CHUBU E/P TOKYOGAS offshore Norway from 2005. Qalhat LNG Freeport LNG OSAKA GAS OSAKA GAS Sanga Sanga • Utility companies (Bontang LNG) CHUBU E/P are expanding into OSAKA GAS North America Producing (2012-14). LNG Planning / Construction Upstream (Potential LNG source) (Source: JOGMEC Sydney Office) Upstream Investment by Japanese LNG Buyers (Tokyo Gas “Challenge 2020 Vision” ) 9 (Source: Tokyo Gas “Challenge 2020 Vision”, Nov. 2011 ) Upstream Investment by Japanese LNG Buyers (Osaka Gas “Mid-term Business Plan 2014-2016 ”) 10 (Source: Osaka Gas “Catalyze Our Dreams”, Mar. 2014 ) Upstream Investment by Japanese LNG Buyers (TEPCO and Chubu E/P established new company “JERA”) 11 Tokyo Electric Power Company, Incorporated and Chubu Electric Power Co., Inc. have jointly established JERA Co., Inc. (“JERA”) on April 30, 2015 to materialize a comprehensive alliance covering the entire energy supply chain, from upstream investments and fuel procurement through power generation. (Source: JERA “JERA Business Plan”, Feb. 2016 ) Key Words for Investing in Upstream Projects for Utility Companies 12 • Understanding Upstream Business Conventional -> Unconventional (CSG, Shale) • Risk Hedge (Seller / Buyer) • Equity Lifting Upstream Investment by Japanese Trading Houses in Australia & PNG 13 Talisman Gas Browse FLNG Project MIMI MITSUBISHI • MIMI is Japan Australia LNG Enfield/Vincent Oil Field Pty Ltd, 50:50 joint venture MITSUI PNG-LNG between Mitsubishi & Mitsui. MARUBENI MIMI was established for the Canning Basin Exploration North West Shelf LNG project Meridian CSG in 1985. MITSUBISHI MITSUI NWS LNG • Trading houses are active in Surat Basin CSG exploration projects as well as MIMI TOYOTA Tsusho development projects. Mitsui and Mitsubishi hold some other exploration licenses Otway Gas Project offshore WA. TOYOTA Tsusho Producing Casino/Henry Construction Bass Gas Project Gas Field Planning TOYOTA Tsusho MITSUI (Source: JOGMEC Sydney Office) Upstream/LNG Investment by Japanese Trading Houses 14 Sakhalin 2 LNG LNG Canada Alberta (CBM) Qatargas / RasGas (Cordova/Montney) • Starting in SE Asia, Abu Dhabi LNG MITSUBISHI TOYOTA Tsusho LNG MITSUBISHI Middle East and MITSUI MITSUI MITSUI Marcellus (Shale) Australia 70’s to 80’s SUMITOMO – Brunei 1972 (1st Cargo) MARUBENI Oman/Qalhat LNG ITOCHU MITSUI – Abu Dhabi 1977 MITSUBISHI – Malaysia 1983 SUMITOMO Barnett (Shale) MITSUI Cove Point LNG – North West Shelf 1989 SOJITZ Brunei LNG SUMITOMO ITOCHU SUMITOMO MITSUBISHI • In Middle East 90’s to Eagle Ford (Shale) Cameron LNG Donngi Senoro LNG early-00’s Malaysia LNG MITSUBISHI MITSUI MITSUBISHI – Qatargas 1996 MITSUBISHI MITSUI – RasGas 1999 Tangguh LNG – Oman 2000 Sanga Sanga MITSUBISHI (Bontang LNG) – Qalhat 2005 SUMITOMO MITSUI Equatorial Guinea Mozambique SUMITOMO Peru LNG • Then, diversify globally LNG LNG SOJITZ MARUBENI MITSUI MITSUI SOJITZ – Africa – Latin America MARUBENI Producing – North America LNG Planning / Construction Upstream (Potential LNG source) (Source: JOGMEC Sydney Office) Upstream Investment by Japanese LNG Buyers (Mitsubishi Corporation) 15 (Source: Mitsubishi Corporation “New Strategic Direction”, May. 2013 ) Key Words for Investing in Upstream Projects for Trading Houses 16 • LNG Value Chain Production -> Liquefaction -> Shipping -> Marketing • Tolling vs Upstream/Liquefaction Packaging (Especially in North America) • Conventional / Unconventional Potential asset for LNG project Emerging Japanese LNG Players 17 • Producing & Developing LNG INPEX - Tangguh, Darwin LNG, Ichthys, IDEMITSU INPEX Prelude JX Nippon - PNG LNG JAPEX JGC JAPEX - Sanga Sanga (Bontang LNG) • Potential projects for LNG INPEX - Abadi FLNG INPEX & JGC - BC Shale w/Nexen JAPEX TOSHIBA JAPEX - Pacific NorthWest LNG • Liquefaction & Export project (Tolling) JX Nippon INPEX IDEMITSU - Triton LNG • LNG off-take INPEX INPEX - Ichthys, (Abadi) JX Nippon - Gorgon JAPEX - MLNG 3, PNW-LNG TOSHIBA - Freeport LNG (Source: Wood Mackenzie “Emerging Japanese LNG Players”, March, 2014 ) Emerging Japanese LNG Player 18 • LNG Terminal by Japanese E&P companies LNG Terminal (Operating) INPEX Naoetsu terminal (Cap: 1.5mpta) LNG Terminal (Constructing or Plan) Completed in 2013 Will receive Ichthys LNG (0.9mtpa) from 2016 JAPEX (SPA with Chubu for 1.0MMton in 2013-2018) JAPEX Soma terminal (Cap: NA) INPEX Under construction (Complete in 2018) Will receive PNW LNG (1.2mtpa) from 2018 JX Nippon JX Nippon Hachinohe terminal (Cap: 1.0mpta) Completed in 2015 Will receive Gorgon LNG (0.3mtpa) from 2016 (Source: Tokyo Gas “LNG Terminals in Japan”, Jul 2013 ) Conclusion 19 • LNG demand in Japan will remain high over the next 5years. Almost half of the supply will come from Australia in 2019. • Utility companies and Trading houses continue to be active investing in upstream LNG projects to secure a stable and diversified supply of LNG. • E&P companies and other new players may enter the LNG industry not only as a developer but also as a off-taker as well. 20 Back up Strategic Energy Plan 21 Zero-emission Power Source (Nuclear + Renewable) Yr 2020: >50%, Yr 2030: =70% Nuclear will remain an important source of electricity. Ratio :As low as possible Energy Independence Ratio: 38% (Yr2010) to 70% (Yr2030) Strategic Energy Plan (revised in) 2010 Strategic Energy Plan (revised in) 2014 (Source: METI Japan).

Load more