Insight and Analysis for the Global LNG Industry

Insight and analysis for the global LNG industry Feature: Feature: Country Focus: Project Spotlight: Egypt ramps up LNG and the methane Argentina - Hanging Mozambique LNG its LNG exports emissions challenge in the balance INDIA’S GAS INFRASTRUCTURE CHALLENGE Gas – and especially LNG imports – are central to Indian energy policy, but their future level and market share remain unclear, in large part due to uncertainty over how the country’s gas infrastructure will be built out. While the government is pushing its city gas programme hard, protracted delay is the norm rather than the exception, casting doubt on the rapidity with which Indian LNG demand can grow. 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Alternatively email us [email protected] or visit our website www.gastechevent.com Co-Hosted by Supported by Ofﬁ cial Partner Organised by DMG416 Exprom advert 210x297 V1.indd 1 26/03/2019 08:27 INDEX Project Spotlight: Mozambique LNG 6 12 17 FEATURE: FEATURE: FEATURE: India's gas Egypt ramps up its LNG LNG and the methane infrastructure challenge exports emissions challenge 21 25 28 COUNTRY FOCUS: PROJECT SPOTLIGHT: TECHNOLOGY: Argentina - Hanging in Mozambique LNG Korean Competition for GGT the balance Editorial ................................................. 4 LNG News .......................................................... 33 Fuel cost competition Global LNG .................... 33 In Transport ................. 49 Supply ............................. 37 Corporate ..................... 53 Demand ......................... 43 Shipping .......................... 57 Events and Conferences ......... 31 Copyright 2019 Minoils Media: LNG Condensed Editorial: Ross McCracken [email protected] Managing Director: Rick Gill [email protected] William Powell [email protected] Events/Advertising: Joao Salviano [email protected] Design: Jeremy Seeman [email protected] LNG CONDENSED | NATURALGASWORLD.COM 3 EDITORIAL FUEL COST COMPETITION S LNG fl ooding into Europe pushing spot LNG profi t margins. No longer; US LNG and reformed carbon prices to multi-year lows close to $4/mn Btu pricing are putting European gas-fi red spark spreads back U demonstrates that regional gas markets have in the money just as nuclear plants are being phased out in become truly globalized. Competition between pipeline gas countries like Germany and regulation limits the operation and LNG is intensifying as buyers put into operation all the of older coal plant. contractual and operational fl exibility at their disposal to Low prices will also encourage new market entrants, access the cheapest possible source of gas. such as Germany and Sri Lanka, as well as market LNG is currently priced both in Europe and Asia-Pacifi c broadening. Rapid adoption of LNG in transport needs at the cost of delivered US LNG into these markets, leaving a supportive regulatory framework to foster low carbon next to nothing on the table for the US exporters who transportation, but also a solid economic case in terms continue to ramp up their liquefaction capacities. of LNG versus diesel or fuel oil costs to encourage fl eet Refl ecting the abundance of gas in the US, prices there owners to take the plunge. With gas prices increasingly have fallen, despite the increase in exports, both as LNG and decoupled from oil and supply having overtaken immediate by pipeline to Mexico. This will sustain the strong rise in natural demand, gas’ share of the transportation market can be gas demand in the country coming from the power sector, expected to rise more quickly. promoting accelerated coal-to-gas switching, and higher gas How long this period of low pricing lasts depends heavily use in petrochemicals and refi ning among other sectors. It will on one large and unpredictable factor: the weather. Q4 also sustain, despite the current lack of profi t margin on LNG 2018 and Q1 2019 spot LNG prices are substantially higher exports, the belief that the US will provide low-priced feedstock than those for summer delivery at around $6.8-8.0/mn Btu, gas for the next generation of LNG plants targeting a forecast a level which puts US LNG back into profi t. If the northern tighter LNG market in the mid-2020s. hemisphere winter is cold, returns should be good, but, if The wave of cheap LNG is also having benefi cial it proves moderate, LNG producers may face a prolonged effects for gas demand in Europe which spells good period of production-cost sales as Asian and European news for greenhouse gas emissions reductions. First, in storage inventories remain high into summer 2020 and a region plagued by gas supply insecurity, owing to its more liquefaction capacity comes on-stream. dependence on a few larger external pipeline suppliers and This would give project developers, and the utilities falling domestic production, it is clear demonstration of that provide those all-important supply and purchase LNG’s ability to diversify countries’ import options. Large agreements, pause for thought, potentially promoting a affordable volumes of gas can reach Europe from multiple re-evaluation of the forecast supply tightness in the mid- production points around the world far beyond the reach of 2020s. This fear of a closing window of opportunity may be pipeline construction. driving the current rush to fi nal investment decisions. The Second, the fall in gas prices is rejuvenating the LNG industry appears doomed to boom and bust on the prospects for gas-fi red power generation. This is being construction side because when the market looks good for reinforced by the recent sharp rise in carbon prices under one it looks good for all, and is equally fated on the demand the EU Emissions Trading Scheme, which penalises side to suffer the vagaries of the weather. However, the carbon-heavy coal-fi red generation to the benefi t of gas. bottom line is that while cheap LNG may hurt producers Gas-fi red power has always been seen as complementary now, it will sustain long-term market expansion. to renewables because of its operational fl exibility, but has for many years suffered from low and often negative — NGW PHOTO: ISTOCK.COM/PASHAIGNATOV LNG CONDENSED | NATURALGASWORLD.COM 4 CONTRIBUTORS ROSS MCCRACKEN Ross McCracken was managing editor of S&P Global’s fl agship analytical newsletter Energy Economist for 13 years. He was formerly Platts crude oil manager EMEA. Ross has written extensively on oil, gas and power markets, with a particular interest in long-term energy forecasts, new technologies and China. He graduated with an MSc from the London School of Economics in 1993. DR. NEIL ALEXANDER FORD Dr. Neil Alexander Ford is a freelance consultant, journalist and expert witness on African affairs, specialising in international relations, the energy sector and political risk. Most of his work focuses on Sub-Saharan Africa, but he also writes on other emerging markets. Neil has a PhD in African international relations from the University of Edinburgh and 20 years of experience as a writer and analyst for magazines, newspapers and websites, including as associate editor of African Business magazine. MARTIN DANIEL After graduating from Oxford, Martin Daniel worked in the Economics Unit of the British Coal Corporation and then the Supply, Transport and Markets team at IEA Coal Research. He later founded the publication Global Private Power and worked for FT Energy and then for S&P Global Platts as editor of Power in Asia and International Gas Report. He is currently a freelance energy consultant. WILLIAM POWELL William has been reporting and commenting on Europe’s gas markets for 20 years. He started in journalism at PH Energy Analysis (now ICIS Heren) in 1995, shortly before the UK devised the National Balancing Point -- Europe’s fi rst gas hub. His subsequent career has included senior management and editorial positions at FT Energy, Petroleum Economist, Argus Media and Platts, where he latterly edited International Gas Report. His focus has been on regional markets and how they function. William also speaks Russian and has had several literary/ academic translations published. LNG CONDENSED | NATURALGASWORLD.COM 5 INDIA’S GAS INFRASTRUCTURE CHALLENGE Martin Daniel Gas – and especially LNG imports – are ndia is steadily becoming more important in determining the future shape of the central to Indian energy policy, but their I global energy market. Oil major BP future level and market share remain forecasts that Indian primary energy demand will balloon more than two and a half times, compared unclear, in large part due to uncertainty with 2017, to 1,928 million tonnes of oil equivalent over how the country’s gas infrastructure in 2040, at which point India will account for 11% of global energy demand up from 6% now. will be built out. While the government The BP Energy Outlook 2019 provides a is pushing its city gas programme hard, succinct assessment of Indian energy and gas protracted delay is the norm rather than prospects. “India accounts for more than a quarter of net global primary energy demand the exception, casting doubt on the growth between 2017-2040” it projects, adding rapidity with which Indian LNG demand that “gas production grows, but fails to keep pace with demand, implying signifi cant growth in can grow.

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