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The
Profits and Promise of Global LNG
In unprecedented testimony before the U.S. Congress,
former Federal Reserve Chairman Alan Greenspan twice focused
on growing global energy imbalances and asserted that LNG is
the most reasonable solution on the horizon to the disturbing
disequilibrium.
Rapidly rising prices over the past three years and the expectation
of sustained healthy energy markets are providing a more competitive
environment for LNG. The impact of conservation measures that
had been implemented over the past decade and had served to
slow energy demand, is moderating in much of the industrialized
world, especially Japan, as recovery gains a foothold in these
economies.
Growing awareness of the onerous environmental impact of oil
and coal consumption, as well as the sharply diminished attraction
of nuclear energy, have led to the increased value of natural
gas in the array of available energy options. After decade-long
resistance to major import projects, including LNG, regulatory
attitudes in the U.S. - the world's largest gas consumer - have
dramatically shifted in favor of increased gas imports.
LNG imports are being resumed, with baseload shipments arriving
from Algeria and Trinidad, as well as spot shipments from a
host of producers. Algeria is now viewed as a viable LNG trading
partner with the U.S., and expanded projects are under development.
LNG imports are seen growing at the astonishing rate of 10%
per annum over the coming decade. Many of the U.S.' pipeline
companies are now proposing ringing the perimeter of the U.S.
with a series of receiving terminals to process LNG from Trinidad,
Algeria, Qatar, Russia, Australia, the Bahamas and Indonesia.
In the coming decade, a domestic natural gas supply deficit
of as much as 6-7 TCF could develop in the U.S. under baseline
scenarios. The U.S., which is facing lower pipeline supplies
from Canada, will be forced to turn to more LNG from a variety
of Atlantic Basin, Far Eastern and Middle Eastern producers
to meet the projected rise in natural gas demand. To satisfy
the shortfall, the U.S. may have to import more than 50 MMT/Y
of LNG by 2020.
World LNG demand for the coming decade, and beyond, is consistently
being revised upward by energy analysts. Gas is expected to
enjoy a greater share of the power generation sector, growing
more rapidly than had previously been projected.
In an effort to minimize security risks, Japan is stockpiling
more LNG and negotiating with a growing list of suppliers. It
is likely that as much as 65-70 MMT/Y of LNG will be imported
into Japan by 2010, up from 56.8 MMT in 2005.
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 deals with Australia and Indonesia,
and are negotiating projects with Iran, Qatar and Oman, among
others. Natural gas as an energy source in Asia in 2005 approximated
11% of total primary energy use, substantially lower than the
world average of 23%, suggesting tremendous room for growth.
In Western Europe, natural gas activity is burgeoning, with
new proposals being developed by France, Norway, Portugal, Italy,
Spain, Greece, Turkey and the UK. LNG trade agreements with
Iran and Russia are being explored after more than a decade-long
hiatus.
Recent technical innovations and cost-cutting measures have
made LNG processing and shipping more affordable, resulting
in increased sales in both Asian and Atlantic Basin markets.
Asian and Western markets will begin to look more alike over
time. Already, Japanese customers are asking for more flexible
terms in their arrangements with traditional suppliers, including
both spot and term contracts, to offset unexpected disruptions
in supply and to help build markets there. U.S. gas consumers
and marketers are signing long-term agreements rather than depending
primarily on spot and short-term arrangements. Eventually both
will adopt portfolio strategies, assembling a blend of supply
and transportation arrangements that fit all needs.
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. Projections are
constructed for 2010, 2015 and 2020, assuming alternative economic
growth rates.
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An outline of the study follows: |
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EXECUTIVE SUMMARY |
Components of
Industrialized Nations' Fuel Mix
World's Rapidly Shrinking Oil Reserve Base
Growing Share of Natural Gas
Gas and Oil Pricing
LNG Outlook
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ECONOMIC CONSIDERATIONS |
The Environment
Fossil Fuel Substitution
Decline of Nuclear Energy
Developing Asian Markets
Decelerating Conservation
New Uses for Natural Gas
New Gas Technologies
Security of Supply
Balance of Payments
International Cooperation
Cost of LNG Production and Shipping
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WORLD ENERGY MODEL |
Economic Growth
World Oil Resources
World Energy Demand
Energy Efficiency
Regional Energy Issues
Prospects for Natural Gas
Prospects for Coal
Nuclear Energy Outlook
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LNG INDUSTRY FORECASTS
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Forecast by Trade Zone Industry Time Line Forecast (2005-2020)
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GLOBAL LNG COMMERCE |
Positive Elements
Negative Elements
Industry Projection
Growing Markets in China and India |
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LNG INDUSTRY PROFILE |
Current Trade
Project Descriptions
Likely Future LNG Trade
Speculative LNG Projects
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LIQUEFACTION CAPACITY |
Existing LNG Liquefaction Plants
Excess Liquefaction Capacity
Additional Liquefaction Requirements
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MICRO ANALYSIS
OF AN LNG PROJECT |
Basic Economics
Liquefaction Plant Costs and Stock
Shipbuilding
Receiving Terminals
Total Capital Requirements Barriers to Entry
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LNG SHIPPING |
Current
LNG Fleet (January 2007)
Ship Employment
Analysis of Ship Procurement and Cost
Changing Design Factors
Tonnage Requirements (2005-2020)
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RECEIVING TERMINALS |
Worldwide Stock of Terminals
Planned Receiving Plants
Offshore Receiving Systems
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| TABLES and CHARTS |
Natural Gas Reserves
Geographic Distribution of Oil and Gas Reserves
World Natural Gas Production
World Natural Gas Consumption
Energy Use Growth Rates
Gas and Oil Prices
C02 Generation from Various Fuels
Fuel Switching Potential
Proved Reserves of Gas by Geographic Areas
Natural Gas Proved Reserves
Worldwide Distribution of Gas Fields
World Nuclear Energy Consumption
Primary Energy Consumption
Energy:GDP Trends
World Gas Consumption by Economic Sector
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
D.O.E. Energy Outlook for 2010-2025
Energy Projections for Market Economies
World Energy Consumption by Type (2000-2020)
China Energy Balance (2005-2020)
India Energy Balance (2005-2020)
International Trade in Natural Gas
Natural Gas Exports by Pipeline (2005)
LNG Exports (2005)
LNG Imports (2005)
World Natural Gas Consumption (1988-2025)
U .S. Gas Supply (1988-2025)
Lower 48 Gas Acquisition Prices
Potential LNG Sources
History of LNG and Internationally Traded Gas Prices
LNG Netback Prices To Liquefaction Plant
D.O.E. Projection of U.S. Natural Gas Supply and Demand
Western Europe Gas Consumption
Rate of Growth in Energy Components
EC Production and Imports (1988-2025)
EC Gas Imports
EC's Energy Outlook 2000-2025
Profile of Ships in Service and Lay-up by Country
(January 2007)
Principal LNG Shipyards and Orders
Tonnage Requirements
Number of Ships Likely to be Ordered
Total Project Capital Investment Breakdown
World Growth Ratio For Various Fuels
World Primary Energy Consumption by Fuel
World Primary Energy Consumption
Primary Energy Demand for the Pacific Region by Country
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