upstream investment trends for japanese lng buyers and ... · jogmec international lng congress...
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Ryuta KITAMURAJOGMEC
International LNG Congress 201614th March, 2016
Upstream investment trends for Japanese LNG buyers and developers
1
Metals Strategy & Exploration, and
Technology Development
Mine Pollution Control
StockpilingOil & Gas UpstreamInvestment and
Research & Development
MissionSecuring Stable Supply of Oil, Natural Gas, Coal and Mineral Resources for Japanese Industries and Citizens
Established: February 29, 2004 [succeeded the functions of Japan National Oil Corporation(JNOC)]
President: Keisuke KurokiCapital: 751 Billion Yen (As of January, 2016) = around 6.83 Billion US$ (110US$/Yen)
Activities
Coal Strategy & Exploration, andTechnological
Support
GeothermalResources
Development
Japan Oil, Gas and Metals National Corporation (JOGMEC)
2JOGMEC Oil & Gas Upstream Projects (Natural Gas)
(As of Jan, 2015)
Equity Capital (50)
Liability Guarantee (12)
Tangguh LNG Project(Indonesia)
Abadi LNG Project(Indonesia)
PNG LNG Project(Papua New Guinea )
Wheatstone LNG Project(Australia)
Rovuma Offshore Area 1 Project
(Mozambique)
Sakhalin I Project(Russia)
Ichthys LNG Project(Australia)
Block B(Vietnam)
Cordova Shale Gas Project(Canada)
Cutbank Dawson Shale Gas Project(Canada)
North Montney Shale Gas Project(Canada)
Horn River Shale Gas Project(Canada)
(Source: JOGMEC)
3Electricity Mix in Japan
(Source: The Federation of Electric Power Companies of Japan)
Fukushima Daiichi nuclear disaster
29.3
43.242.5
28.6
1.7 0.0
10*8kWhNo nuclear plant in operation in 2014FY
Sendai plant in Kyushu has been restarted in Aug. 2015
2 reactors in operation (Sendai) and 1 more (Takahama) under preparation at the moment
4LNG Imports in Japan
(Source: MOF Japan)
70.078.5
87.3 87.5 88.5
MMtontrillionJPY
Fukushima Daiichi nuclear disaster
85.0
LNG imports at record high LNG Spot Price in Japan
(Source: METI Japan)
Month LNG WTI
2014.03 18.3 100
2014.06 13.8 105
2014.09 13.2 93
2014.12 11.6 59
2015.03 8.0 48
2015.06 7.6 60
2015.09 7.4 45
2015.12 7.4 37
(US$/MMBtu) (US$/bbl)
5Long Term Energy Supply and Demand Outlook
(Source: METI Japan, “Long Term Energy Supply and Demand Outlook”, July 2015)
6Japanese LNG Import Outlook
(Source: BREE Resources and Energy Quarterly, Mar 2014)
OSAKA GAS
7Upstream Investment by Japanese Utility Companies in Australia & PNG
StanleyProducing• Darwin LNG (FID : 2003)
(First LNG in 2006)
• Pluto LNG (FID : 2007)(First LNG in 2012)
• QC LNG (FID : 2010)(First LNG in 2015)
Under Construction• Gorgon LNG (FID : 2009)• Wheatstone LNG (FID : 2011)• Ichthys LNG (FID : 2012)
LNG Planning Stage• Sunrise & Evan Shoal• Crux• Stanley
(Source: JOGMEC Sydney Office)
ProducingConstructionPlanning
OSAKA GASSunrise / Evans Shoal
OSAKA GASCrux
OSAKA GAS
TOKYO GAS
CHUBU Electric
Gorgon LNG
TOKYO GASQueensland Curtis LNG
TOKYO GAS
OSAKA GAS
CHUBU E/P
TOHO GAS
KANSAI E/P
Ichthys LNGTOKYO E/P
TOKYO GAS
Darwin LNG
TOKYO GAS
KANSAI E/P
Pluto LNG
TOKYO E/P
KUSHU E/P
Wheatstone LNG
8Upstream Investment by Japanese Utility Companies
• Osaka Gas acquired WI for Sanga-SangaBlock in Indonesia in 1990.
• Osaka gas invested in Snorre oil field offshore Norway from 2005.
• Utility companies are expanding into North America (2012-14).
(Source: JOGMEC Sydney Office)
ProducingLNG Planning / ConstructionUpstream (Potential LNG source)
OSAKA GAS
CHUBU E/P
OSAKA GASSnorre Oil Field
TOKYOGASBarnett (Shale)
OSAKA GASPearsall (Shale)
TOKYOGASCove Point LNG
Freeport LNG
TOKYO GAS
OSAKA GAS
CHUBU E/P
Cordova (Shale)
OSAKA GAS
Qalhat LNG
OSAKA GAS
Sanga Sanga(Bontang LNG)
9Upstream Investment by Japanese LNG Buyers(Tokyo Gas “Challenge 2020 Vision” )
(Source: Tokyo Gas “Challenge 2020 Vision”, Nov. 2011 )
10Upstream Investment by Japanese LNG Buyers(Osaka Gas “Mid-term Business Plan 2014-2016 ”)
(Source: Osaka Gas “Catalyze Our Dreams”, Mar. 2014 )
11Upstream Investment by Japanese LNG Buyers(TEPCO and Chubu E/P established new company “JERA”)
(Source: JERA “JERA Business Plan”, Feb. 2016 )
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.
12
• Understanding Upstream BusinessConventional -> Unconventional (CSG, Shale)
• Risk Hedge (Seller / Buyer)
• Equity Lifting
Key Words for Investing in Upstream Projectsfor Utility Companies
13• MIMI is Japan Australia LNG
Pty Ltd, 50:50 joint venture between Mitsubishi & Mitsui.MIMI was established for the North West Shelf LNG project in 1985.
• Trading houses are active in exploration projects as well as development projects.Mitsui and Mitsubishi hold some other exploration licenses offshore WA.
(Source: JOGMEC Sydney Office)
Upstream Investment by Japanese Trading Housesin Australia & PNG
NWS LNG
Casino/HenryGas Field
Surat Basin CSG
ProducingConstructionPlanning
MITSUBISHI
Talisman Gas Project
MITSUBISHI
Canning Basin Exploration
MITSUI
Enfield/VincentOil Field
MITSUIMeridian CSG
MITSUI
MIMI
MIMIBrowse FLNG
MARUBENIPNG-LNG
TOYOTA Tsusho
TOYOTA Tsusho
TOYOTA Tsusho
Otway Gas Project
Bass Gas Project
14• Starting in SE Asia,
Middle East and Australia 70’s to 80’s
– Brunei 1972 (1st Cargo)
– Abu Dhabi 1977– Malaysia 1983– North West Shelf 1989
• In Middle East 90’s to early-00’s
– Qatargas 1996– RasGas 1999– Oman 2000– Qalhat 2005
• Then, diversify globally– Africa– Latin America– North America
(Source: JOGMEC Sydney Office)
Upstream/LNG Investment by Japanese Trading Houses
ProducingLNG Planning / ConstructionUpstream (Potential LNG source)
MITSUBISHI
MITSUI
Cameron LNG
MARUBENIPeru LNG
MITSUBISHI
LNG Canada(Cordova/Montney) TOYOTA Tsusho
Alberta (CBM)
SUMITOMO SUMITOMOCove Point LNGBarnett (Shale)
SUMITOMO
MITSUI
Marcellus (Shale)
MITSUIEagle Ford (Shale)
MITSUBISHIBrunei LNG
MITSUBISHIDonngi Senoro LNG
MITSUBISHI
MITSUI
Sakhalin 2 LNG
MITSUBISHI
MITSUI
ITOCHU
Oman/QalhatLNG
MITSUIAbu Dhabi LNG
MITSUI
MARUBENI
ITOCHU
SUMITOMO
SOJITZ
Qatargas / RasGasLNG
MITSUBISHIMalaysia LNG
MITSUI
MozambiqueLNG
MITSUI
MARUBENI
Equatorial Guinea LNG
SUMITOMO
SOJITZ
Sanga Sanga(Bontang LNG)
MITSUBISHI
MITSUI
SUMITOMO
SOJITZ
Tangguh LNG
15Upstream Investment by Japanese LNG Buyers(Mitsubishi Corporation)
(Source: Mitsubishi Corporation “New Strategic Direction”, May. 2013 )
16Key Words for Investing in Upstream Projectsfor Trading Houses
• LNG Value ChainProduction -> Liquefaction -> Shipping -> Marketing
• Tolling vs Upstream/Liquefaction Packaging(Especially in North America)
• Conventional / UnconventionalPotential asset for LNG project
17Emerging Japanese LNG Players
(Source: Wood Mackenzie “Emerging Japanese LNG Players”, March, 2014 )
• Producing & Developing LNGINPEX - Tangguh, Darwin LNG, Ichthys,
PreludeJX Nippon - PNG LNGJAPEX - Sanga Sanga (Bontang LNG)
• Potential projects for LNGINPEX - Abadi FLNGINPEX & JGC - BC Shale w/NexenJAPEX - Pacific NorthWest LNG
• Liquefaction & Export project (Tolling)IDEMITSU - Triton LNG
• LNG off-takeINPEX - Ichthys, (Abadi)JX Nippon - GorgonJAPEX - MLNG 3, PNW-LNGTOSHIBA - Freeport LNG
JAPEX
IDEMITSU INPEX
JGC
TOSHIBAJAPEX
INPEX
INPEX
JX Nippon
• LNG Terminal by Japanese E&P companiesINPEXNaoetsu terminal (Cap: 1.5mpta)
Completed in 2013Will receive Ichthys LNG (0.9mtpa) from 2016(SPA with Chubu for 1.0MMton in 2013-2018)
JAPEXSoma terminal (Cap: NA)
Under construction (Complete in 2018)Will receive PNW LNG (1.2mtpa) from 2018
JX Nippon Hachinohe terminal (Cap: 1.0mpta)
Completed in 2015Will receive Gorgon LNG (0.3mtpa) from 2016
18Emerging Japanese LNG Player
(Source: Tokyo Gas “LNG Terminals in Japan”, Jul 2013 )
LNG Terminal (Operating)
LNG Terminal (Constructing or Plan)
JAPEX
INPEX
JX Nippon
19Conclusion
• 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.
Back up
20
21Strategic Energy Plan
Strategic Energy Plan (revised in) 2010 Strategic Energy Plan (revised in) 2014
Zero-emission Power Source(Nuclear + Renewable)
Yr 2020: >50%, Yr 2030: =70%
Energy Independence Ratio:38% (Yr2010) to 70% (Yr2030)
Nuclear will remain an important source of electricity.
Ratio :As low as possible
(Source: METI Japan)