Atlantic LNG Project – Train I

Geopolitics of Natural Gas Study – Atlantic LNG part 2 James A Baker III Institute for Public Policy Rice University James Ball & Rob Shepherd 26-27 May 2004

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Rob Shepherd Rob Shepherd is a senior associate consultant of Gas Strategies. He has worked on a wide range of consultancy subjects since joining Gas Strategies in 1993, his interests including the commercial and strategic aspects of LNG projects, industry and regulatory structures across the world, and the future of UK gas markets. Rob has led and worked on several Gas Strategies’ due diligence and audit projects. He joined Gas Strategies after a long career with BP. In the early 1980’s he managed BP’s share of the North West Shelf LNG project in Australia. In the mid-eighties he played a leading role in BP’s UK gas business, selling to British Gas and starting BP’s move into direct gas marketing. Following this, he managed BP’s share of the Qatar LNG project. [email protected]

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In Atlantic Basin, LNG market has shifted Source Diversity Until Atlantic LNG of Trinidad & Tobago, structures favoured project sales, rigid structures Buyer flexibility begat seller flexibility Trade flexibility in Atlantic basin resulted

LNG Imports 70 Pipeline 60 Imports 50

40 in Bcf/d 30 Domestic Production 20

0 1980 1985 1990 1995 2000 Source: Alphatania © Gas Strategies Consulting Ltd 8 US LNG imports by source 1971-2003 (mtpa)

12 10 8 6 4 2 0

1 6 1 6 1 6 1 7 7 8 8 9 9 0 9 9 9 9 9 9 0 1 1 1 1 1 1 2

Algeria Trinidad Nigeria M. East Pacific Basin

Source: Alphatania © Gas Strategies Consulting Ltd 9 US LNG Imports History

4 m

Bc 3

0 1996 1997 1998 1999 2000 2001 2002 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

Source: Gas Strategies © Gas Strategies Consulting Ltd 10 Sources of European LNG Imports 1980- 2003 (mtpa)

35 30 25 20 15 10 5 0

0 6 2 8 8 82 84 8 88 90 9 94 96 9 00 02 9 9 9 9 1 19 19 1 19 19 1 19 19 1 20 20 Al geria Liby a Ni geria Trinida d M iddle East Paci fic Basi n Source: Alphatania © Gas Strategies Consulting Ltd 11 European LNG Imports 1964-2003 (mtpa)

30 25 20 15 10 5 0

4 8 2 6 0 4 8 2 6 0 6 6 7 7 8 8 8 9 9 0 9 9 9 9 9 9 9 9 9 0 1 1 1 1 1 1 1 1 1 2 UK France Spain Italy Belgium Turkey Greece Portugal

Source: Alphatania © Gas Strategies Consulting Ltd 12 Atlantic LNG T1 - Trinidad

UPSTREAM PRODUCTION Physical Supply Chain BP REPSOL Corporate Relationships Shareholdings REVENUE PIPELINE ONSHORE SPLIT NGC SHAREHOLDERS LNG PLANT BP 34% ATLANTIC LNG BG 26% REPSOL 20% TRACTEBEL LNG 10% LNG SHIPPING NGC 10% SALES TRACTEBEL BG FOB ______(chartered to __ Gas Natural)

BUYERS

Source: Gas Strategies GAS NATURAL TRACTEBEL © Gas Strategies Consulting Ltd 13 Trinidad’s ATLANTIC LNG Cargoes Already Follow US-Spain Price Differential:

1,000,000 and over + 5.00

900,000 4.00 800,000

700,000 3.00 Volume USA Spain 600,000

2.00 tu 500,000 $/MMB c metres LNG 1.00 i 400,000 cub 300,000 0.00 200,000 -1.00 100,000

0 -2.00 AMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASO 1999 2000 2001 2002 2003

Henry Hub - Spain Price Differential

UPSTREAM PRODUCTION BP, ECMA JV NCMA JV REPSOL BG 50% QUASI BG 45.9% CVX 50% TOLLING Eni 17.3% AGREEMENT Veba 17.3% Petrotrin 16.9%

LNG PLANT Physical Supply Chain BP 42.5% BG Corporate Relationship LNG Repsol 25% 32.5% SALES FOB

BUYERS Gas Natural Distrigas Gas de Euskadi BG Repsol Tractebel

UPSTREAM PRODUCTION INDIVIDUAL bpTT 67% BG 29% others 4% FOB LNG (bpTT: BP 70%, Repsol 30%) SALES AGREEMENTS SHAREHOLDERS PROCESSING LNG PLANT FEE BP 34% ATLANTIC LNG BG 26% REPSOL 20% TRACTEBEL LNG 10% NGC 10%

BUYERS BG BP others

Source: Gas Strategies © Gas Strategies Consulting Ltd 16 Egypt LNG - The Trinidad Graduate Project UPSTREAM UPSTREAM Train 1 BG 35.5% WDDM CONCESSION New Petronas 35.5% BG 50%, PETRONAS 50% Upstream EGAS 12% EGPC 12% TOLLING TOLLING GdF 5% AGREEMENT AGREEMENT

Train 2 ELNG Co (common facilities) BG 38% Petronas 38% OPERATING COMPANY EGAS 12% EGPC 12% OPERATING & FACILITIES FOB LNG AGREEMENT FOB LNG SALES SALES AGREEMENT AGREEMENT

ELNG Co & LNG PLANT LNG PLANT LNG PLANT Operating Co TRAIN 1 TRAIN 2 TRAIN 3 etc BG 35.5% Petronas 35.5% EGAS 12% EGPC 12% GdF 5% BUYERS BUYERS BUYERS

[email protected]

3 mtpa LNG (3.2 including NGLs) Located Point Fortin, SW Trinidad Plant started in March 1999, first delivery end- April Shareholders: BP (34%), BG (26%), Repsol (20%), Tractebel (10%), T&T Govt. (10%) Cost of project – US$ 965mn LNG sold to Gas Natural (then Enagas) 40% and Tractebel (then Cabot) 60%

Extra 6.8 mtpa of LNG Train II started Aug 2002; Train III in Aug 2003 Both trains owned by BP (42.5%), BG (32.5%), Repsol (25%) Cost of expansion US$ 1.1bn LNG sold to Lake Charles and El Paso