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GAS PRICES AND PRICING

GAS PRICES AND PRICING. GAS PRICING. Peter Ross, Wimbledon Energy Slide. GAS PRICING. Peter Ross, Wimbledon Energy Slide. GAS PRICING. Peter Ross, Wimbledon Energy Slide. CRUDE OIL INDEXATION. Peter Ross, Wimbledon Energy Slide. CRUDE OIL - JCC.

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GAS PRICES AND PRICING

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  1. GAS PRICES AND PRICING

  2. GAS PRICING Peter Ross, Wimbledon EnergySlide

  3. GAS PRICING Peter Ross, Wimbledon EnergySlide

  4. GAS PRICING Peter Ross, Wimbledon EnergySlide

  5. CRUDE OIL INDEXATION Peter Ross, Wimbledon EnergySlide

  6. CRUDE OIL - JCC The average of 17 crude oils imported into Japan History Relevance now? Peter Ross, Wimbledon EnergySlide

  7. CRUDE OIL - JCC Japanese consumer still pays too much for energy And Still a very rich consumer economy Peter Ross, Wimbledon EnergySlide

  8. CRUDE OIL - JCC “Hold close to nurse for fear of something worse” Peter Ross, Wimbledon EnergySlide

  9. RasGas SELLING TO PETRONET Volume building 2.5 mty to 5 mty LNG 25 years MBQ (take or pay) basis Price indexed to JCC 3 Indian company marketing team Peter Ross, Wimbledon EnergySlide

  10. INDIAN MARKET FOR GAS Power + fertiliser 80% Peter Ross, Wimbledon EnergySlide

  11. INDIAN MARKET FOR GAS Fuel – naphtha Replace with pipeline gas Peter Ross, Wimbledon EnergySlide

  12. INDIAN MARKET FOR GAS Pricing naphtha Crude oil * 1.2 current / historic assumption ? Peter Ross, Wimbledon EnergySlide

  13. INDIAN MARKET FOR ELECTRICITY Relationship to crude oil ? Relationship to naphtha ? Future relationship ? Peter Ross, Wimbledon EnergySlide

  14. INDIAN MARKET FOR ELECTRICITY End-user ability to pay? State electricity boards? NTPC declined LNG proposal as too expensive - preferred their own tender Compare fertiliser companies as a market Peter Ross, Wimbledon EnergySlide

  15. QATAR AS PRODUCER Drill and produce gas Sell gas, LNG and condensate Use ethane Build liquefaction, jetties, etc Use gas for power Peter Ross, Wimbledon EnergySlide

  16. QATAR AS PRODUCER Raise finance Load LNG ships Use boil-off Diesel? Unload Receive USD Peter Ross, Wimbledon EnergySlide

  17. QATAR AS PRODUCER LNG price Relevance of crude oil? Relevance of JCC? Peter Ross, Wimbledon EnergySlide

  18. QATAR AS PRODUCER Gas price for projects in Qatar is not related to JCC; or to Crude oil Peter Ross, Wimbledon EnergySlide

  19. OMAN AS PRODUCER Gas into fertiliser plant For export to India Price is $0.80 Not JCC Peter Ross, Wimbledon EnergySlide

  20. INDIA - GAS PRICE AT CONSUMER GATE LNG price DES excludes Regas facilities andVery high customs duty on LNG capital goods Very high Import taxPipeline transport Peter Ross, Wimbledon EnergySlide

  21. INDIA - GAS PRICE AT CONSUMER GATE Consumer can afford maximum $3.50 at gate Suggests LNG max DES $2.50 Most need a lower price Peter Ross, Wimbledon EnergySlide

  22. INDIA - GAS PRICE AT CONSUMER GATE Domestic production approx. $2 to $3.5 delivered Can be complex / subsidised Can be localised e.g. NE Region 1997 target: parity fuel oil in 4 years Rs 2,850 / m3 (2002) + tax + transport 40% Fuel Oil parity 2002 estimate Peter Ross, Wimbledon EnergySlide

  23. INDIA - GAS PRICE AT CONSUMER GATE Gas Consumer targets include NTPC LNG $2.50 to $3.00 Enabling 2.5c to 3.0 c/kWh Also = Dhabhol viability estimate “Stability” Naphtha minus 20% Peter Ross, Wimbledon EnergySlide

  24. INDIA - PRICE FOR IMPORTED GAS August 2002 sign main price terms Base JCC = $18 LNG des = $2.28 Seller proposes Floor JCC = $16 LNG des = $2.03 Cap JCC = $24 LNG des = $3.04 And finalise fully termed GSPA asap ........ Peter Ross, Wimbledon EnergySlide

  25. INDIA - PRICE FOR IMPORTED GAS November 2002 Seller: OK, Cap reduced to JCC = $21 to $22 Provided GSPA signed very soon OrRevert to previous pricing Peter Ross, Wimbledon EnergySlide

  26. INDIA - PRICE FOR IMPORTED LNG February 2003 No sales at all announced To Indian consumers By LNG Buyer Peter Ross, Wimbledon EnergySlide

  27. INDIA - PRICE FOR IMPORTED LNG • Negotiating position of seller • Consumers price expectation now • Gas discovery in India • LNG Buyer’s terminal • Pipeline Peter Ross, Wimbledon EnergySlide

  28. INDIA - PRICE FOR IMPORTED LNG Who can afford to move? Indian consumer? Qatari seller of gas and associated liquids? Indian government? Peter Ross, Wimbledon EnergySlide

  29. INDIAN GOVERNMENT ROLE Low LNG import price – good for Clean efficient industry Balance of payments Indian tax base versus end-user Other countries phasing out import taxKorea – no tax on LNG import for power Peter Ross, Wimbledon EnergySlide

  30. LNG PRICING INDXATION Includes Mixed basket Coal indexed etc Peter Ross, Wimbledon EnergySlide

  31. LNG PRICING • We’ve seen • Oman remove the floor • Tepco and Tokyo Gas concede • volume and shipping flexibility • Customer responsive • Trinidad to USA / Netback Peter Ross, Wimbledon EnergySlide

  32. LNG PRICING - GENERAL Peter Ross, Wimbledon EnergySlide

  33. LNG PRICING Now much more competitive Limited market for LNG Inflexible deliverability Price is coming down Peter Ross, Wimbledon EnergySlide

  34. GAS PRICING • Equatorial Guinea • Big gas find • Rapid development • Price of gas 25 cents into plant • Profit from royalty and NPI on plant • LNG and GTL for next development Peter Ross, Wimbledon EnergySlide

  35. GAS PRICING Move bulk at low price Collect rent mid and down stream Add value; service; associated liquids Peter Ross, Wimbledon EnergySlide

  36. GAS PRICING Possible: Market related LNG versus traditional pricing -flexibility Gas long market erodes MBQs – classic Increased infrastructure = competition = erosion of MBQs GTL priced against oil products netback – “no gas price” Peter Ross, Wimbledon EnergySlide

  37. GAS PRICING • Gas increasingly as a commodity • Market gas long? • Failure to monetise – competition • Take your profit where? • Market segmentation • Risk diversification Peter Ross, Wimbledon EnergySlide

  38. GAS PRICING • OR • STORE IT IN THE GROUND Peter Ross, Wimbledon EnergySlide

  39. GAS PRICING • “Why should people in Europe suffer for the price of my gas because of what’s happening in Venezuela ?” • Egyptian Oil Minister, Mr. Sameh Fahmy, February 2003. • Proposing new gas price-fixing formula, ending link between gas prices and crude oil prices. Peter Ross, Wimbledon EnergySlide

  40. The next big success story Our Indian hosts? Peter Ross, Wimbledon EnergySlide

  41. THE END Peter Ross, Wimbledon EnergySlide

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