outlook for the long term contracts in a globalizing market · outlook for the long term contracts...
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Torstein Indrebø, Honorary Secretary General
International Gas Union
Geneva, 19 January 2015
Outlook for the Long Term Contracts
in a Globalizing Market
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2
16
IGU Global Membership
> 97 % of the global gas market
www.igu.org
91 Charter members
51 Associate members
IGU members Founded in 1931
* Status as of end October 2014
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Business models in gas - changing
More globalised and liberalised markets
From national to global gas companies
Short term and trading with market access and hubs
Companies moving up and down the value chain
From gas to energy companies
Changing business environment!
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Value Chain for Gas
UPSTREAM LIQUEFACTION SHIPPING REGASIFICATION MAKETING
UPSTREAM LIQUEFACTION SHIPPING REGASIFICATION SALES
LNG Chain
Piped Gas Chain UPSTREAM SALES PROCESSING TRANSPORT TERMINAL
Long value chain, capital intensive and life time 20 yrs +
Risk management is important
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Gas supply infrastructure
5 Source: IEA Natural Gas Market Review 2009
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Azerbaijan – Italy
- Case for long term partnerships and contracts
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Source: IHS CERA, various sources.
China: Based on long term contracts
China 2012:
Production 107 bcm
Consumption 144 bcm
Source: BP Statistics 2013
Turkmenistan supplies 30 bcm/yr plus
Myanmar supplies 10 bcm/yr plus
Source: SHWE Gas Movement
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Long term contacts – secure investments
Sales and purchase agreements
Supply and demand security (Russia-China)
Liquifaction facilities – US gas exports
Regasification terminals – gas import
Pipelines – long haul
Large end users as industrial and power companies
LTC - managing investment risk
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Conclusions
LTC – a key vehicule for expansion of gas markets
LTC flexibility:
price reviews, destination clauses
take or pay levels & annual/daily flexibility
LTC - confirm political and business partnership
Long term contracts
- a stabilising factor in global gas trade
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Thank you for your attention!
www.igu.org
Natural Gas – keeps the lights on!