Global gas and LNG themes - Q1 2017

Table of contents

• New trains will drive strong global LNG supply growth through winter 17/18 and summer 18
• PETRONAS’ MLNG capacity ramps up as feedgas dwindles
• Australian domestic gas crunch could constrain LNG exports
• Permian oil drilling has increased sharply, and we expect the play to deliver large associated gas volumes
• Three major pipeline projects, designed to carry more than 6 bcfd, are planned for Nov. 2017
• Asia’s emerging LNG markets will import ~16 mmtpa by 2025
• Singapore policy changes in Feb 2017 to allow new piped gas supply and third party spot LNG imports up to 10% of total gas imports
• Environmental policy in China will continue to support growth in power and residential sectors
• Weak gas fundamentals in Brazil could affect rest of Southern Cone
• Nuclear outages in France have exacerbated North/South pipeline bottlenecks, pushing gas prices in South France and Spain above Asian LNG price
• So far, US LNG has flowed to higher priced markets than NW Europe. Trades to North Asia have materialized only through the winter
• As global LNG markets rebalance, NW Europe is set to absorb more LNG – particularly from Q2 2018
• Oversupplied global gas/LNG market throughout H2 2018 but US LNG economics could support prices in summer 2018
• Sonatrach is adapting to changing market conditions, offering spot indexation and shorter term contracts for extensions
• The emerging Asian LNG buyers dominated contracting in 2016
• ExxonMobil makes counter-cyclical move into Mozambique

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