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Goldman Sachs Global LNG Seminar
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BP’s Global Gas Position
Egypt Trinidad Tangguh Vico Angola Northwest Shelf Bolivia BP Gas Resources BP Gas Sales
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LNG Industry Dynamics Continue to Drive Growth
mtpa 2002 Sales volume of 111 million tonnes LNG p.a. 15 bcf/d or 6% of world gas demand of 230 bcf/d 2.5 million boe/d or 3% of world oil demand 2002 $25b annual sales revenues; 130 LNG ships – cost of $4b per year 7% CAGR 10% CAGR U.S. Europe mtpa Other 5% CAGR Taiwan Korea 7% CAGR Japan Early LNG growth Rise of Asian LNG Plentiful Gas Reserves Asia lacks Proximal supply New M.E Low Cost Supply New Asian customers Lower growth Higher demand growth driven by lower Asian prices Gas demand growth continues Drivers New Atlantic Low Cost Supply CCGT drives gas demand Major p/l competition LNG gains greater market share of US supply gap Costs allow new smaller markets to be reached US proximal supply declines US access constraints & low prices Constrained US access
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Key LNG Markets Europe to India Asia Pacific Atlantic Adgas Trinidad
LNG remains a regional business US: deep and liquid market -- gaining access to regas capacity ensures access to market Europe: partial liberalisation -- regas capacity and customers generally difficult to secure Asia-Pacific: customers prefer long term contracts -- key is securing commitments UK Italy USA USA Spain Korea Adgas Japan China India Trinidad Europe to India Asia Pacific Atlantic Vico Tangguh NWS Merchant Trader Early Market access Portfolio opportunities Linear business model High Inertia environment Gas monetisation priority
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BP LNG Today and Future Developments
Focus is on developing access to key premium markets development/capacity in re-gas. Market positions in advance of equity supply managed through short term supply deals & spot. Emerging supply network provides new opportunities for LNG trading Spain, France Italy, UK India USA Japan, Korea, China USWC Middle East Africa Adgas to Spain (3 Years) Qatargas to Spain (3Years) Iran LNG Kakinanda re-gas & power project, India Dabhol, India Atlantic Nigeria to Spain spot cargoes Egypt Italy re-gas terminal LNG to UK Asia Pacific Trinidad Trains 2 & 3 Cove Point re-gas capacity Trinidad Trains 4-6 Build New US East Coast re-gas NWS supply into Japan/Korea Guangdong re-gas terminal ownership Fuijan supply contract Philippines supply (LOI) Vico NWS Train 5 – Japan/Korea/China Tangguh – Japan/Korea/Taiwan/Java, US West Coast Long term economic supply Short term opportunities Potential new projects Current activites
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British Trader in Trinidad (10/05/03)
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Trinidad - a New Complex Set of Deliveries to Capture US Market Opportunities
Diversion & Back Fill Opportunity Boston Framework offered the potential to divert TT volumes destined for Spain to more attractive markets in the US. For example, we expect to be supplying Trinidad volumes to Cove Point and the Dominican Republic next year. The differential cost of supply is $0.3/mmBtu, which is a substantial potential saving for BP and its partners on an annual basis. This has allowed both supplier and customer to optimize and share the benefits arising from market arbitrage and shipping costs. The risk management component of the arrangement gave the customer an opportunity to balance supply/demand in its principal domestic gas market in Spain. What each of these commercial components had in common was flexibility – both for the customer and for the supplier. Spain Cove Point Elba Island Lake Charles Trains 2 & 3 Value Chain Alignment – Repsol acquire upstream interest in BP Trinidad & Tobago Potential Diversion – Trinidadian volumes destined for Spain to more attractive US markets Risk Management – opportunity to balance supply / demand in Spain Train 1 40% Spain 60% US & Other Trinidad Trains 2 & 3 40% Spain 60% US & Other
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Cove Point Terminal
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Dominican Republic
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Key LNG Markets Europe to India Asia Pacific Atlantic Adgas Trinidad
LNG remains a regional business US: deep and liquid market -- gaining access to regas capacity ensures access to market Europe: partial liberalisation -- regas capacity and customers generally difficult to secure Asia-Pacific: customers prefer long term contracts -- key is securing commitments UK Italy USA USA Spain Korea Adgas Japan China India Trinidad Europe to India Asia Pacific Atlantic Vico Tangguh NWS Merchant Trader Early Market access Portfolio opportunities Linear business model High Inertia environment Gas monetisation priority
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Building a Gas Business in South-China
Kovykta Long-Distance Gas Pipeline Tangguh to Fujian BP 37% - net 125 mmscf/d 2002 Beijing NWS to Guangdong BP 16.7% - net 50 mmscf/d 2002 Guangdong Terminal & Trunkline BP 30% First LNG terminal in China Fujian 2001 Guangdong Regas Terminal Tangguh LNG Yacheng Y13 BP 34% - net 100 mmscf/d (in production) 1996 Yacheng Northwest Shelf LNG
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Tangguh
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BP Equity Gas into LNG Plant
mmscf/d 3,000 2006E 2003 2,000 1,000 Sontrach Shell Qatar BP XOM TFE BP internal analysis based on publicly available data
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Building Markets Ahead of Supply
BP’s growth in equity gas is supported by building key LNG market positions in all three regions ahead of the supply markets captured as of Dec ‘02 gas supplied to plants mmscfd mmscfd Trinidad 2&3 Trinidad 1 Indonesia Australia China 2000 2000 New LNG Other 1500 1500 Americas 1000 1000 Spain 500 500 Japan ~ 00 01 02 03 04 05 08 source: BP projections , 08
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