THE TRIENNIAL International Conference and Exhibition on liquefied natural gas (LNG 18) will feature high level speakers from a variety of industry segments.
President of the International Gas Union David Carroll said the papers and presentations would provide delegates with information and comment not previously available to the global industry.
“We are mindful that such an important global event will be held at one of the most critical times in the world gas industry as low oil prices continue to impact on the LNG industry as a whole and in turn place increased pressure on planning and timing for future growth,” he said.
“We look forward to ongoing partnerships being strengthened when industry participants assemble in Perth and expect new project relationships will be under the microscope among attendees.”
LNG 18 steering committee chairman Jérôme Ferrier said at the time of LNG 17, held three years ago in Houston, the industry was euphoric as it experienced steady growth with an exponential number of gas prospects.
“Three years later, following the slump of oil and gas prices in 2014 and 2015, and the slowing down of world economy and energy demand, the picture has dramatically changed,” he said.
Mr Ferrier said the obvious main concern for the LNG industry is that prices could remain depressed for a long period of time, due to low demand.
“But the world energy community and particularly the experts are convinced there is a right price for oil and a right price for gas as well. Reducing both capital and operating costs will be a major challenge for the development of new projects,” he said.
A highlight of the event will be the opening plenary session, at which Shell chief executive Ben van Beurden, Chevron chief executive John Watson and Woodside chief executive Peter Coleman will all speak on the topic of The Transformation of Gas.
Shell vice president of integrated gas projects for Shell Global Solutions Malaysia, Hilary Mercer, is also set to give a presentation, discussing what needs to change in the delivery of LNG megaprojects.
Drawing on her own experience, gained whilst delivering LNG megaprojects, Ms Mercer will provide insight into how LNG mega projects are being developed using thematic approaches, how technical and non-technical risks are managed, what is being done to work with contractors to continually improve construction capability, as well as how the next generation of project delivery professionals are being developed.
“The stakeholders involved are more varied with different needs and aspirations, the partnerships created to deliver the opportunity are more disparate, new geographic locations are being explored, the impact of non-technical risks on project delivery continues to rise and more technology advances are available to deploy,” she says.
“But has the recipe for developing LNG mega projects become too complex, are they still affordable? What is the right amount of technological development to deploy? Is the industry creating the best environment to develop the next generation of LNG project delivery professionals?
“What sorts of contractor relationships are needed to ensure safe, high quality, reliable and affordable project delivery? What can be learnt from the past that will help or hinder development in the future?”
Stefan Vos de Wael
Shell Eastern Petroleum general manager of global investment grade, portfolio and strategy Stefan Vos de Wael said the global LNG market was continuing to evolve as supply from these major projects and others came on stream.
But as the industry grew, it was essential that demand continued to meet supply, he says, arguing that the industry needed to determine the course.
“The raft of decisions – from how to monetise the resource, what type of projects to develop and who to bring on board to help you do that – can make or break the opportunity,” he said.
“There is also the weight of expectation that both politicians and populations have on what it means for them, and how they could benefit, both in terms of using gas to support their own power systems, or in exporting it (via pipelines or as LNG) to generate revenue.”
Eni midstream gas & power officer Umberto Vergine said he was positive about the outlook for LNG, with European LNG demand likely to rise significantly despite short-term turbulence.
This demand would be driven by shrinking domestic gas production and ambitions emissions policies, he said.
“Combined with ample regasification capacity and the European Union willingness to diversify supply sources, this will foster Europe’s pivotal role as balancing the market for global LNG,” he said.
Mr Vergine will discusstwo flagship Eni projects in his LNG 18 address, Mozambique Area 4 and Zohr in the Egyptian East Mediterranean – how they are positioned in the global LNG market and which characteristics help them meet market requirements.
Key project specifics will be highlighted that differentiate them and turn them into first call value propositions
“The way the LNG market will work tomorrow is shaped today.
Traditional buyers as well as new entrants have a unique opportunity to get their evolving needs fully satisfied, through flexible and innovative commercial terms.”
“Among producers, the winners of tomorrow shall combine the quality and size of their upstream assets, providing price competitiveness with outstanding ability to adapt to the evolving buyers’ demands.”
President of major Japanesse LNG buyer Jera Co, Yuji Kakimi, says the industry should expect a more fluid Asian liquefied natural gas (LNG) pricing market to emerge over the next decade as the industry moved to one of greater supply volumes and choice in sourcing LNG.
“This would generate a gradual move away from long-term contracts to shorter and mid-term agreements, and a further rise in the current upwards trend for spot cargo purchases,” Mr Kakimi says.
Also speaking at LNG 18, Mr Kakimi says that while the recent ratio of spot transactions, including short-term deals, had rapidly increased, nonetheless the majority of long-term transactions were still based on a formula linked to oil prices.
“This poses a dilemma for current LNG suppliers whose returns are under pressure because of the sustained slump in oil prices,” he said.
“However, I plan to detail to LNG 18 delegates why I think that in 10 years’ time, a specific Asian LNG pricing market will have emerged that has measureable liquidity and whose transactions within that market environment, regardless of scale or stakeholder interests, are transparent in their pricing.”
Law firm Baker Botts energy sector chair Steven Miles will discuss the ways the LNG market is being widened to new areas through the use of the shipping container as a cost competitive transport solution.
“Emerging commercial, legal and technological developments are now allowing LNG in ISO containers to be delivered to these previously inaccessible LNG market destinations,” he said.
“The containers are typically 40-foot long forms that can be loaded with LNG and shipped by freighter, rail or truck, and delivered to a power plant,” Mr Miles says.
“This containerisation trend will increasingly bring highly mobile, cost competitive additional LNG consignments into the overall energy market mix with the broader community gain of a much lesser negative environmental footprint through the phasing out of more intensive fossil fuels used in these previous ‘gas island’ areas.”