Assessing Significant Developments in the Asia Pacific Gas

Markets and the Influence on LNG Dynamics in the Region

and Globally

Alistair Smith, Head of LNG Origination, Asia Middle East

BP LNG

LNG World Conference

11 August 2014
Singapore
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Contents

• Expanding gas and LNG trade

• Diversification of sources of LNG
• US HH-indexed LNG in Asia
• Emergence of new LNG Buyers
• Increased flexibility in LNG market
 Expanding Gas Trade

Source: Energy Outlook 2035.  BP 2014

 Diverse Sources of LNG Supply

• Asian Buyers are looking for both

diversity in both pricing and
geographic source of supply
– also by types of supplier
• On pricing, the desire of many Buyers
for exposure to gas indices has been
an important Asian market driver in
recent years

Source: Energy Outlook 2035.  BP 2014

 Significance of US LNG Exports

• US set to become a net LNG exporter

by 2018
• c.11 Bcf/d US LNG exports expected
by 2030
• USGC (and Alaska) offer attractive
options for Asian Buyers

Source: Energy Outlook 2035.  BP 2014

 Impact of US Shale Gas
US government net LNG import forecast NYMEX Henry Hub futures curve

11 10
2006 AEO
10 9 30 Oct 08
2008 AEO
9 2010 AEO
8 2012 AEO
8
7 7
6 30 Oct 06

$/mmbtu
5
6
30 Oct 10
bcf/d

4 5 30 Oct 12
3
4 30 Oct 13
2
1 3
0 2
-1
-2 1
-3 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 M+2 M+14 M+26 M+38 M+50 M+62
Source: Projections from US Energy Information Administration’s Source: New York Mercantile Exchange on snapshot dates shown
Annual Energy Outlook for years shown
 Impact of Shale Gas in Other Regions

Source: Energy Outlook 2035.  BP 2014

USGC LNG Export – One Example
• BP has a Liquefaction Tolling Agreement with FLNG Liquefaction
• BP will supply natural gas, pay fees to FLNG and lift LNG
• 4.4-plus mtpa of capacity  >230,000,000 MMBtus per year of LNG
• BP joins Chubu Electric and Osaka Gas as tollers from the first two trains
• Toshiba and SK share capacity in Train Three

• Good fit with BP’s existing North America

gas and power capabilities
• Complementary position to BP’s existing
portfolio of equity and 3rd party LNG
− multiple supply sources & markets
− multiple indexation options
• Enhances BP ability to provide its LNG
customers with flexible solutions
USGC – Freeport Schedule

• Freeport received DOE non-FTA export approval on 17 May 2013

• CB&I, Inc. and Zachry Industrial, Inc. awarded EPC in December 2013
• The Final Environmental Impact Study issued on 16 June 2014 was
approved by FERC on 30 July 2014. Construction is expected to begin in
4Q 2014
• First train is anticipated to commence commercial operations in 2Q/3Q
2018 with second train starting 6 – 9 months later

2014
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
FERC Approvals
Final Investment Decision
 Emerging LNG Markets
Estonia/Finland: reduce dependence on
Russian pipeline gas

Poland: reduce dependence on

Russian pipeline gas

Jordan: replace lost Egyptian pipe import

Kuwait / Bahrain /Dubai / Abu Dhabi:

domestic gas shortages

Israel: domestic gas shortage Vietnam: domestic output

nearing plateau
Mexico: bottlenecks from Pakistan: domestic
Thailand: domestic
pipeline US supply gas shortage
output nearing plateau
Bangladesh:
domestic gas shortage Philippines: growing
Brazil: flexible supply to domestic demand
match hydro dependence Myanmar: domestic
gas shortage
Malaysia: gas shortage
Indonesia: supply domestic
Chile: substitute oil products used in peninsular Malaysia
market with domestic LNG
by mining companies and supply Singapore: enhance
shortage from Argentina supply diversity

Uruguay: reduce
dependence on S. Africa: replace declining Floating re-gas – existing/under development
imported oil/Argentina domestic feed to GTL plant Floating re-gas – planned

Argentina: decline in Onshore re-gas – existing/under development

domestic production Onshore re-gas – planned
Sources: public information
 Increased Flexibility in LNG trade

Sources: Cedigaz, CIS Stat, FGE MENAgas Service, IHS CERA, PIRA Energy Group
BP Statistical Review June 2014  BP 2014
Summary

• Growing world gas trade, with LNG’s share rising

• Asia’s appetite for diversification of sources of LNG
• Importance of US HH-indexed LNG in the Asian LNG market
• Floating regas and the emergence of new LNG Buyers
• New types of flexibility in the Asian LNG market in Asia, alongside term contracts