Business environment – supply and demand
PESA – 2012 Year in Review – APPEA Conference| May 2013 | AGL External
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The information in this presentation:
› Is not an offer or recommendation to purchase or subscribe for
securities in AGL Energy Limited or to retain any securities
currently held.
› Does not take into account the potential and current individual
investment objectives or the financial situation of investors.
› Was prepared with due care and attention and is current at the
date of the presentation.
› Actual results may materially vary from any forecasts (where
applicable) in this presentation.
› Before making or varying any investment in securities in AGL
Energy Limited, all investors should consider the appropriateness
of that investment in light of their individual investment
objectives and financial situation and should seek their own
independent professional advice.
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
2
Agenda
›
3
Demand
›
Domestic and LNG
›
Global markets and potential new export demand
›
Supply by participant
›
Existing contracts for domestic demand rolling off
›
Domestic users of natural gas calling for reservation
›
Replicating US circumstances a better way forward
›
An emerging issue – swing gas
›
A policy prescription for gas producers AND users
›
Removing impediments to the discovery and production of more gas
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
4
Demand
» Presentation Title
» February 2008
» AGL Internal
Current demand
5
Demand is largely industrial with some power generation Residential is relatively small
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: BREE
Domestic demand
6
Demand from industry, households and gas-fired generation is
forecast to grow to 2030
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: AEMO
LNG.....
7
Demand from LNG is set to create a step change in east coast
demand
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: AEMO
8
Power Generation – latest
forecasts indicate growth
in gas-fired generation is
unlikely
» Presentation Title
» February 2008
» AGL Internal
Power generation
9
Latest electricity demand forecasts indicate new gas-fired
power generation unlikely to be required in medium term
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: Simshauser and Nelson
10
Will new LNG export
capacity (beyond that
already committed to) be
forthcoming?
» Presentation Title
» February 2008
» AGL Internal
Significant LNG developments
11
There are significant investments in new LNG export
capabilities in various regions
Country
Algeria
Angola
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Eq Guinea
Indonesia
Indonesia
Indonesia
Indonesia
Malaysia
Malaysia
Mozambique
Nigeria
Nigeria
PNG
PNG
Russia
Russia
USA
USA
USA
USA
USA
Total
Project
Arzew GL3-Z
Angola LNG
APLNG
GLNG
Gorgon
Ichthys
Prelude FLNG
QCLNG
Wheatstone LNG
Kitimat LNG
Shell CNPC LNG
EG LNG 2
DS LNG
Abadi FLNG
Sengkang
Tangguh Expansion
Petronas FLNG
MLNG Train 9
Mozambique Area 1 LNG
Brass LNG
NLNG Seven Plus
PNG LNG
PNG LNG Expansion
Sakhalin Expansion
Shtokman Phase 1
Cameron LNG
Cove Point
Freeport
Lake Charles
Sabine Pass Phase 2
Operator
Sonatrach
Chevron
ConocoPhillips/Origin
Santos
Chevron
Inpex
Shell
BG
Chevron
Spectra/Apache
CNPC/Shell
Noble/Marathon
Pertamina/Mitsubishi
INPEX Masela
EWC
BP
Petronas
MLNG
Anadarko
NNPC
NNPC
ExxonMobil
ExxonMobil
Gazprom
Gazprom
Sempra Energy
Dominion Resources
Freeport/Macquarie
BG
Cheniere
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Capacity
4.7
5.2
9
7.8
15
8.4
3.6
8.5
8.9
5
12
4.4
2
2.5
2
4
1
3.6
10
10
8.4
6.6
3.5
4.8
7.5
12
4.5
10.9
4.5
9
199.3
Under construction/in development
Under construction
Under construction
Under construction
Under construction
Under construction
Under construction
Under construction
Under construction
Under construction
In development
In development
In development
Under construction
In development
In development
In development
Under construction
In development
In development
In development
In development
Under construction
In development
In development
In development
In development
In development
In development
In development
In development
Source: CLSA
The shale story....estimated global reserves
12
If new Australian reserves are proven, will new (unannounced)
LNG trains be developed?
Current global
consumption
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: Energy Informer
13
Supply
» Presentation Title
» February 2008
» AGL Internal
Reserves...
14
Reserves held mainly by participants with LNG interests – only
4,000 PJ of reserves currently uncontracted
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: AEMO
15
Supply and Demand
» Presentation Title
» February 2008
» AGL Internal
Supply and demand
16
Possible that current reserves are insufficient to meet demand
to 2030 – critical that new supply is added
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: AEMO
17
Contracted position of
retailers....
» Presentation Title
» February 2008
» AGL Internal
Contracted position of retailers
18
AGL and other retailers’ contracts for gas supply fall off
significantly from 2016
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: ACIL Tasman
19
Domestic users are calling
for a reservation policy.
But evidence of what
keeps prices down is best
obtained from the US
» Presentation Title
» February 2008
» AGL Internal
Evidence of policies which keep prices down
The US shale experience – developing lots of reserves and
production has implications for prices
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: BP
20
21
Swing gas – an issue
largely unconsidered
(until now)
» Presentation Title
» February 2008
» AGL Internal
Gas demand variability
22
‘Swing’ gas is important for meeting demand variability – LNG
market is changing economic incentives to supply swing gas
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
Source: AGL
23
Domestic reservation
unlikely to reduce prices –
better solution is to find
and produce more gas –
but current public policy is
doing the opposite
» Presentation Title
» February 2008
» AGL Internal
Recent joint statement
Recent joint statement by AI Group, ESAA, APPEA and CEC
highlights the problems industry is facing
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
24
Recent joint statement
Recent joint statement by AI Group, ESAA, APPEA and CEC
highlights the problems industry is facing
» PESA – 2012 Year in Review – APPEA Conference
» May 2013
» AGL External
25