1. Global LNG: New Supplies, Growing Demand
Jay Cuclis | Vinson & Elkins LLP
March 7, 2012

2. 2012 2012 LNG Export Terminals LNG Terminals LNG Terminals
Operational (34)
Under Construction/Planned (56)
Total (estimated): 90
Sources: Zeus Liquefied Natural Gas Report, February 17, 2012; LNG terminal/project operator websites; and news releases
2012
LNG Terminals
Operational (34)

3. LNG Imports by Country (2010)
Asia represents >60% of LNG imports
LNG Imports by Country (2010)
Importer
Mmtpa
Japan
70.6
S Korea
34.1
Spain
20.5 UK
14.2
Taiwan
11.6
France
10.5
China
9.5
India
9.3 US
8.5
Italy
6.7
Turkey
5.9
Belgium
4.5
Mexico
4.4
Chile
2.3
Portugal
2.2
Kuwait
2.1
Brazil
2.0
Canada
1.5
Argentina
1.3
Other
1.1
Total Imports
223.8

4. Asian LNG Markets
Lack of sufficient indigenous energy resources has driven LNG demand
Japan: Concerns raised by Fukushima have increased focus on LNG
Strong government support for LNG purchases
New LNG buyers emerging in Asia (e.g., Thailand, Malaysia, Indonesia)
Potential for shale gas development in Asia, particularly in China, Indonesia and India

5. New Sources of LNG Supply
Continuing expansion of the Australian gas supply, including potential shale gas
Development of major new gas projects around the world, including in Russia, East Africa, the Mediterranean and South America
Emergence of North America as a potential LNG exporter
Greater deployment of floating LNG facilities, creating potential to “un-strand” gas reserves

6. 2012 2012 2005 2005 North American LNG LNG Import Terminals
Operational Import Terminals (14)
Proposed Export Terminals (10)
Existing Export Terminal (1)
Total Import Terminals: (14)
Total Export Terminals: (11)
2012
LNG Import Terminals
Operational Import Terminals (14)
2005
LNG Import Terminals
Operational Import Terminals (4)
Proposed/Planned Import Terminals (55)
Total (estimated): 59
2005
LNG Import Terminals
Operational Import Terminals (4)
Source: Federal Energy Regulatory Commission
Source: Federal Energy Regulatory Commission

7. North American LNG Canada
Several new LNG export projects under development
Canadian gas currently being exported to the US may find better markets in Asia
Recent political issues in the US (e.g., Keystone) likely to increase and accelerate Canadian interest in Asian markets
United States
New shale gas discoveries have vastly increased domestic supply, reducing LNG imports and creating the potential for LNG exports
Government approvals needed from DOE and FERC
At least 8 companies currently seeking LNG export rights
To date, one approval for export to non-FTA countries granted by DOE (Cheniere/Sabine Pass)
LNG from Cheniere contracted to be sold to Gas Natural Fenosa, GAIL, KOGAS and BG
Denial of export permit requires finding that exporting LNG would not be in the public interest

8. Legal Issues Affecting Supply and Demand
Complexity of Project Development
Key Sales Terms often Contentious
Long lead time to develop projects, achieve FID
Complex JVs, typically including multiple parties from various countries
Government approvals
Pricing mechanisms and price reviews
Term of contract, volumes committed
Transportation terms and LNG vessels
Supply source flexibility for seller; destination flexibility for buyer
Demand by buyers for equity positions
LNG Supply & Demand
LNG Sales Documentation
Additional Issues
Lengthy period to negotiate, commonly a year or more
Some efforts to standardize, but still typically bespoke
Legal regimes in new supply sources
Sanctions or other political considerations impacting “free market flow” of natural gas/LNG

9. For More Information, Please Contact Jay Cuclis, Vinson & Elkins LLP
James L. Cuclis, Partner Hong Kong • Houston •
Jay's practice involves the representation of clients in international mergers and acquisitions, energy matters, and project development and finance transactions. During the last 30 years, he has worked on transactions in more than 50 countries throughout the Americas, Asia, Europe, the Middle East, and Western Africa, with a particular focus on the energy industry. Jay worked in Europe for five years, in the London office from and in the Moscow office from Jay is a member of V&E's Management Committee and serves as Head of the Corporate Department, International Coordinator of the firm's Asia practice, and Managing Partner of the Hong Kong office.