Global LNG Supply & Demand

Updated July 2018

The figure illustrates existing (active and under construction) and proposed global LNG liquefaction capacity far outpacing projected demand through 2030.

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Closing North American LNG Arbitrage

Updated July 2018

The figure shows the influence of Henry Hub LNG exports on the Japan Crude Cocktail (JCC) linked prices for LNG. Solomon assumes a fixed Brent Oil price of 70 United States dollars per barrel (USD/bbl) to illustrate the significant differential between a Henry Hub-linked and an oil-linked price.

The JCC is a widely accepted global benchmark for LNG. Worldwide LNG liquefaction projects tend to be vertically integrated from the well to the plant outlet, with the entire project being “sunk.” As only the liquefaction toll is sunk in the North American projects, and as low-cost feedstock (natural gas) is abundant, Solomon sees large buyers moving to a Henry Hub-indexed pricing structure and decoupling from oil-linked contracts.

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Growth in LNG Export & Import Countries

Updated July 2018

The figure shows the location of major liquefaction facilities and LNG shipping routes worldwide. The varying dot sizes indicate the facilities’ capacities. LNG is coming to European and East Asian markets primarily from the Middle East, Indonesia, Malaysia, Australia, and, recently, the United States.

*Approximate Locations (as of May 2018)

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Asian LNG Imports

Updated July 2018

The figure shows historical LNG demand for the five main Asian regions through March 2018 and Solomon’s projection of growth to 2030 (a 4.2% annual growth rate).

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LNG Premiums to Asia & Europe

Updated July 2018

The figure shows the 2025 full-cycle costs of delivering LNG to Asia and Europe from both Canadian and US projects. The arbitrage  opportunity that existed between North American and Asian markets at 100 USD/bbl oil prices was one of the key drivers behind the large number of proposed LNG export projects in both the US and Canada (the Asian gas price is 85% of the Japan Crude Cocktail oil price (JCC)). With the sharp drop in oil prices since the end of 2014, many of the proposed US and Canadian projects are challenged below an oil price of 70 USD/bbl on a full-cycle cost basis, although the arbitrage opportunity remains positive when competing directly with JCC on a Btu basis.

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DOE L48 Non-FTA LNG Export Licenses

Updated July 2018

The figure shows US LNG projects. In the US, two facilities are operating: Sabine Pass Trains 1–4 (2.2 Bcf/d) and Cove Point (0.7 Bcf/d); and four more are under construction: Freeport (2.1 Bcf/d), Cameron (1.7 Bcf/d), Elba Island (0.35 Bcf/d), and Corpus Christi (2.1 Bcf/d). Most of these volumes have firm offtake agreements. Sabine Pass Trains 5–6, Corpus Christi, and Magnolia LNG are 50%, 67%, and 25% subscribed, respectively.

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Asian Power Capacity by Fuel Type

Updated July 2018

The figure shows the current and projected power generating capacity, by fuel type, for four Asian regions: China, India, Japan, and Korea.

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NEB West Coast Canada LNG Exports

Updated July 2018

The figure shows Western Canadian LNG projects approved by the National Energy Board (NEB). If all these projects were to proceed, it would increase Western Canadian natural gas production to 52 Bcf/d.

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Australian LNG Projects

Updated December 2017

This figure shows Australia’s LNG projects. Currently, Australia has seven operating LNG projects and three under construction. Other projects are also being considered.

Australia’s largest project is Gorgon, developed by Chevron, ExxonMobil, and Shell. The Greater Gorgon area field has more than 35 trillion cubic feet (Tcf) of resources. Gorgon’s project capacity is 15 million tons per annum (MTPA). Project cost is 54 billion Australian dollars (B AUD). Gorgon shipped its first cargo in March 2016.

Another large Australian project is Wheatstone, with a capacity of 8.9 MTPA and budget of 34B AUD. Both Gorgon and Wheatstone include domestic gas plants. The majority of Australian LNG projects are supported by long-term contracts.

Figure Source: The Australian Petroleum Production & Exploration Association (APPEA)

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Russian LNG Supply

Updated December 2017

Russia has two LNG projects: Sakhalin 2 and Yamal. The Sakhalin 2 LNG project commenced operation in 2009. The project operator is Sakhalin Energy (Gazprom 50%, Shell 27.5%, Mitsui 12.5%, and Mitsubishi 10%). Sakhalin 2 LNG is part of a large project that includes oil and associated gas production from two Pultun-Astozhskoe offshore platforms plus gas and NGL from the Lunskoe Platform. All platforms are located in the northern region of the island of Sakhalin, while the LNG plant is located in the southern region, connected to production facilities by pipeline.

The Yamal LNG project includes three trains, which are expected to commence production from 2017 to 2019. The Yamal LNG project is owned by Novatek (50.1%), Total (20%), CNPC (20%), and Silk Road Find (9.9%). The majority of gas (86%) will be shipped to the Asia/Pacific region (mostly China) through the Bering Strait in summer and the Suez Canal in winter. Special LNG tankers will be required to operate in icy conditions without icebreakers. The remaining volume of gas will be shipped to Europe. The gas will come from the Yuzhoe-Tambeyskoe gas field located near the LNG plant in the port of Sabetta. This gas field has conventional gas developed by very productive vertical wells, which significantly reduces the cost of development.

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Liquefaction Capacity per Country

Updated December 2017

This chart shows liquefaction capacity per country to 2020. Projects that are under construction or are planning to start LNG production after 2020 are not shown. By 2020, Australia will become the world’s largest LNG producer, with a capacity of around 85 million tonnes per annum (MTPA)—surpassing Qatar.

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LNG Contract Expiries

Updated December 2017

This chart illustrates the volume in billions of cubic feet per day of long-term contracted LNG that is set to expire and is up for renewal. By 2026, one-third of current global demand will have expired and will need to be renewed.

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