The Profits and Promise of Global LNG
(August, 2008)

The unprecedented volatility being observed in the world energy markets underscores the need for timely and in-depth analysis of the rapidly changing global LNG industry. For a long while, it had generally been assumed that LNG would comprise a continually expanding component of international gas trade. The challenge before analysts had been simply to estimate the pace of industry growth and predict who the major beneficiaries would be.

The events of the past year have called into question all the prevailing optimistic assumptions, and the expected growth of the industry is no longer at all ssured. Profound imbalances among the elements of the LNG production chain, including liquefaction, shipping and regasification capacity, have created severe bottlenecks that significantly compromise the smooth operation of projects.

The trend of declining infrastructure costs that had been the hallmark of, and driving force behind, much of the industry’s growth, has been reversed, and LNG is now facing a period of sharply accelerating price increases. Skilled, highly-specialized personnel that had been readily available in the early 2000s, are now in critically short supply.

Many of the industry’s larger traditional suppliers, such as Indonesia, Nigeria and Algeria, are facing an array of problems that threaten their ability reliably to supply existing customers, let alone allow development of new markets.

All of the above issues notwithstanding, unusual opportunities still remain for those industry participants who are adroit at recognizing and adapting to the new industry paradigm.

World LNG demand for the coming decade, and beyond, is expected to continue growing, although at a slower rate than the 7.7% per annum recorded over the past decade. Gas is likely to satisfy a large share of the emerging demand in China, India, and the Asia Pacific market.

Many new trade opportunities are developing in Asia that were not considered even speculative just one decade ago. China and India, which hold the promise of generating huge markets over the coming decade, have concluded major deals with Qatar, Australia and Algeria, and are negotiating projects with Nigeria, Russia and Oman, among others. Natural gas as an energy source in Asia in 2007 approximated 10.6% of total primary energy use — substantially lower than the world average of 23.7% — suggesting tremendous room for growth.

In Western Europe, natural gas activity is burgeoning, with new proposals being developed by France, Norway, Italy, Spain, Turkey and the UK. As the operating conditions of the industry become more problematic, there is growing room for negotiation in supply contracts. The smooth operation of a project is becoming more difficult to achieve and unreliable long-term trading partners are being shunted to the side while spot trade is encouraged.
In consideration of all these factors, Energy Research Associates is pleased to announce the publication of

The Profits and Promise of Global LNG

This study is a comprehensive examination of the worldwide trade in LNG. The analysis is sharply focused in a business context with a careful examination of where, and how, profits are generated in the industry. The legal, financial, economic, and regulatory issues that define the industry are carefully analyzed. Industry models are constructed for 2010, 2020 and 2030, assuming alternative economic growth rates.

The Profits and Promise of Global LNG

• Components of Industrialized Nations’ Fuel Mix
• World’s Rapidly Shrinking Oil Reserve Base
• Growing Share of Natural Gas
• Gas and Oil Pricing
• Rise of Short-Term and Spot Trading
• Western Reliance on Arab Oil

• The Environment
• Fossil Fuel Substitution
• Re-emergence of Nuclear Energy
• Developing Asian Markets
• Security of Supply
• International Cooperation
• Cost of LNG Production and Shipping
• Shrinking Resource Base
• Decelerating Conservation
• Balance of Payments Consideration
• Growing Indigenous Gas Use
• Geo-political Tensions
• Threat of OPEC-like Gas Cartel

• Slowing Global Economic Growth
• Price Volatility and Demand Destruction
• World Energy Demand
• Regional Energy Issues
• Prospects for Natural Gas
• Prospects for Coal
• Nuclear Energy Outlook
• India and China: The Pivotal Countries

• LNG Trade Forecast by Trade Zone
• Industry Time Line Trade Forecast (2008-2030)
• Energy Profiles by Country
  • U.S. • Spain • Qatar • Japan • Korea • Taiwan
  • Australia • China • India • Brunei • Indonesia
  • Malaysia • UK • France • Italy • Russia • Algeria
  • Oman • Egypt • Nigeria • Trinidad

• Current Trade
• Project Descriptions
• Future LNG Trade
• Possible LNG Projects
• Speculative Projects

• Basic Economics
• Liquefaction Plant Costs
• Shipbuilding
• Total Capital Requirements

• Existing LNG Liquefaction Plants
• Shortage of Liquefaction Capacity
• Additional Liquefaction Requirements

• LNG Fleet
• Tonnage Requirements (2008-2015)

• Surplus of Worldwide Stock of Terminals
• Planned Receiving Plants
• Offshore Receiving Systems
• Analysis of Potential Problems with Projection
• Escalating Capital Costs
• Global Shortage of Trained Personnel
• Safety Issues
• Unavailability of Capital Requirements
• Barriers to Entry

• Global Natural Gas Reserves
• Geographic Distribution of Oil and Gas Reserves
• World Natural Gas Production and Consumption
• Energy Use Growth Rates
• Gas and Oil Prices
• Worldwide Distribution of Gas Fields
• World Nuclear Energy Consumption
• Primary Energy Consumption
• Energy: GDP Trends
• World Gas Consumption by Economic Sector
• LNG Book Promo:6x9 8/12/08 12:39 PM Page 8
• Distribution of Global Oil and Gas Reserves
• Geographic Distribution of Gas Demand
• Consumption of Natural Gas for Electricity Generation
• OPEC Oil and Gas Reserves
• OPEC Production of Natural Gas
• OECD Reliance on OPEC Oil and Gas
• OECD Reliance on Russian Gas
• D.O.E. Energy Outlook for 2010-2030
• Energy Projections for Market Economies
• World Energy Consumption by Type (2008-2030)
• World Energy Consumption by Geographic Sector
• China and India Energy Balance (2008-2030)
• International Trade in Natural Gas (2007-2030)
• LNG Trade by Region (2007-2030)
• Potential LNG Sources<
• Qatar LNG Infrastructure
• History of LNG and Internationally Traded Gas Prices
• Global LNG Netback Prices To Liquefaction Plants
• Western Europe Gas Consumption
• Projection of Japanese Energy Mix (2008-2030)
• EC Production and Imports (1988-2030)
• EC’s Energy Outlook (2005-2025)
• Liquefaction/Regasification Capacity Ratio
• Profile of Ships in Service by Project (June 2008)
• Principal LNG Shipyards and Orders
• Tonnage Requirements by Project
• Number of Ships Likely to be Ordered (2008-2030)
• Industry Capital Requirements by Activity

The Profits and Promise of Global LNG

The analysis is meticulously documented with over 150 tables and charts of supporting statistics. The focus is economic and includes a thorough scrutiny of the profit centers in the industry as well as potential negatives impacting its smooth operation.