Summary article on LNG Conference in Shenzhen I found searching Delfin on WeChat (China's Facebook). I used google translate to get the english version. Delfin is mentioned as a participant at the conference and the rest of the article summarizes points discussed at the conference. Here it is.
CNOOC: China's import LNG increase in 2018 is expected to be half of 2017, about 6 million tons
Original 2018-04-26 eo Southern Energy Watch
Full text 2056 words, reading takes about 4 minutes
Southern Energy Watch
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Eo reporter Huang Yanhua Feng Jie
Recently, the 13th China LNG International Conference in 2018, sponsored by the Guangdong Oil and Gas Association and the Guangdong Petroleum Institute, was held in Shenzhen. Some 200 international companies including Shell, Cheney Energy, Delfin LNG Midstream, Canada Steelhead LNG, and CNOOC, Sinopec, Hong Kong and China Gas, Shenzhen Gas, and other upstream and downstream companies in the industry chain attended the conference.
The meeting made relevant reports and discussions on the links of the industrial chain of the international and domestic LNG markets. The major issues that the eo reporter will discuss in the industry are summarized as follows:
1
Will the international LNG market return to the seller's market around 2020?
Shell China Vice President Natural Gas Bernard Samuels
In 2020, there will be a possible shortage of LNG supply on a global scale. The main reason is the lack of investment in upstream LNG liquefaction projects, especially the continued decline in global LNG investment in 2016 and 2017.
The mismatch between LNG demand and supply needs has led to a greater deadlock in LNG supply growth. On the one hand, LNG upstream investors want to ensure investment returns and require LNG producers to sign long LNG agreements to lock in risks. On the other hand, in recent years, international LNG buyers have also needed shorter contracts and smaller total contracts to maintain their competitiveness in the downstream market.
Chief Representative of Cheney Energy China Representative Office Jia Ying
Around 2020, there will be a gap in global LNG supply, and some new projects will be needed to supplement this gap.
Considering that a project will take at least 4 years from the start of construction to production, there should be more new projects in 2016 to make final investment decisions (FIDs), but in fact 2016 and 2017 are FID's new lows. This means that in 2020 there may be a situation where supply falls short of demand.
Combining this round of final investment in Australia in 2009-2012, many LNG projects were decided. At that time, China signed a lot of LNG contracts and participated in the upstream investment and construction. From 2013 to 2015, the U.S. decided a lot of LNG projects, but during the signing of this round of LNG contracts, China is almost blank.
Wood Mackenzie Consulting Senior Consultant Manager Huang Miaoru
Around 2022, global LNG demand will exceed the supply capacity of currently operating and under construction projects. This means that new liquefaction projects are needed to meet the demand. Considering that it is necessary to realize the increase of new supply in 2022, and the project construction will take 4-5 years, new or final investment decisions will be required this year or next year to meet the supply demand.
It is expected that natural gas prices will gradually recover in 2020, as the increasing demand needs to be higher than the current level of natural gas prices to meet the new project.
2
What will be the increase in China's LNG imports in 2018?
Guangzhou Customs Statistics Institute Wei Weisheng
According to the customs import historical data, monthly trend regression analysis method is used to predict that, under the influence of other factors, it is predicted that by 2018, China's total natural gas imports will increase by about 40% to reach about 99 million tons. Gas natural gas imports are expected to increase by about 11% to about 34 million tons; LNG imports are expected to increase by about 70% to 65 million tons.
It is expected that China's natural gas import will continue to increase rapidly in 2018, among which the increase in imports of gaseous natural gas will be relatively small, and LNG imports will increase substantially.
Deputy General Manager of CNOOC Gas & Electricity Group Co., Ltd. Trading Branch Wu Hongkun
In 2017, China's LNG imports increased from 26 million tons to 38 million tons, an increase of 12 million tons. We expect China's total LNG imports to reach a scale of 44-46 million tons in 2018, which will reduce by about half from the growth in 2017. The reason why such judgments are made is not based on the needs of the entire Chinese natural gas. China's demand is still very large. The main reason lies in the utilization of China's LNG terminals and the status and expectations of interconnection and interconnection of pipeline networks. In the effective market area last year, LNG receiving stations were operating at full capacity, especially in East China and North China. The utilization rate of receiving stations in 2016 is very low. Although the receiving terminals in the south have the capacity to spare, they are subject to the interconnection and interconnection of the pipeline network, and the south gas cannot be effectively transported to the north.
We believe that the space for growth that can be reserved for LNG imports in 2018 is about 6 million tons, which is about half of last year.
3
What is the price level of North American LNG to China?
Chief Representative of Cheney Energy China Representative Office Jia Ying
The greatest advantage of U.S. resources is low cost. The U.S. currently has more than 22 trillion cubic meters of natural gas resources costing less than 3 U.S. dollars/mmbtu, which means U.S. natural gas will stay below 3 U.S. dollars/mmbtu for a long time. This ensures that the U.S. LNG exports will not be affected by the volatility of upstream gas prices.
U.S. liquefaction plants do not need to invest upstream, and only need to build a liquefaction plant. This will make the liquefaction plant investment will not be too large, significant scale effect.
Since the drop in oil prices in 2014, the price of LNG in the United States has not changed so much. When oil prices continue to slump, the price of oil-linked LNG can be as low as around US$6/mmbtu, but is it possible that prices below the cost will last long?
The US LNG-to-Asia CIF price is around US$8/mmbtu, and the FOB price is around US$6/mmbtu.
Canadian Steelhead LNG China Consultant Liu Jiang
Since the drop in oil prices, the slope of the price of LNG linked to oil prices has fallen to 12%. When the price of oil is low, the price of LNG decreases accordingly. The characteristics of North American LNG projects are that the cost behind the formula is fixed, and the cost of shipping in the formula is also conducted downstream. The advantage of LNG in North America is the price of 115% HH. This part of the gas source price is very stable in the price structure.
The current DES price from Canada to China is around $7.3/mmbtu.
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4
Hong Kong and China Gas consider investing in LNG receiving stations
Chief Executive Officer of Hong Kong and China Gas Co., Ltd.
In 2017, Hong Kong and China Gas sold a total of 20.3 billion cubic meters of natural gas and 27 million customers.
Hong Kong and China attach great importance to the investment of LNG, and they are ahead of the competition.
China's first LNG receiving station Dapeng LNG receiving station Hong Kong and China have shares. A 30-kilometre submarine pipeline was built at the Dapeng Receiving Station to transport gasified LNG to Hong Kong via this submarine pipeline.
In addition, Hong Kong and China established a joint venture in Shanxi Jincheng and Shanxi Jinmei Group to build a liquefaction project capable of liquefying 250 million cubic meters a year. The source of coal gas from Jincheng, the liquefaction project, was put into operation in December 2008.
At present, we have some cooperation in Shenzhen, Hebei Caofeidian and Huanghua Port. Some projects have already been talked about, but it will take more time for government approval.
Hong Kong and China hope to have more cooperation at the LNG receiving station. The LNG receiving station has two major functions. One is the ability to import LNG, and the other is to store gas.
(This article is organized according to the content of the speech in the field. Without the review by the speaker, the pictures and data cited in the article come from the conference site and must not be used for commercial purposes.)