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The evolving global gas and LNG landscape

Sep 19, 2018
4 min read
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A packed auditorium heard from the biggest IOC gas players, trading companies and new U.S. LNG greenfield companies during yesterday’s Global Leaders panel. The engaging panel saw the likes of Italy’s ENI, Royal Dutch Shell and Russia’s Novatek talked about their gas and LNG strategies.

Massimo Mantovani, Chief Gas & LNG Marketing and Power Officer, Eni said: “We are planning to increase our portfolio. Our LNG market is growing and we want to reach a sizeable portfolio and we are looking at geographical diversification.

“North Africa is a very important area for us. We are strong in Algeria and Libya. We buy a lot of gas from both countries. In Egypt we are the biggest producer with our Zohr field. Egypt is growing a lot as a market and is consuming something like 55 billion cubic feet. There is gas in the country and they are looking to open two LNG terminals. Egypt is also looking to export its gas in the future.”

Steve Hill who is the Executive Vice President at Shell Energy stated: “The portfolio model has worked very well for us. It brings value for our suppliers and customers. It creates a lot of fl exibility for the industry. We operate over 60 ships today. It also has a bigger value for launching new projects and long term business. When you look at launching new projects we see quite a difference between the desire of the producers and desire of buyers in terms of length of contract and flexibility.”

Mark Gyetvay, Deputy Chairman & CFO, Novatek spoke at length about its Yamal LNG project in Siberia, “We are blessed with abundant amount of resources. Today we have 3.3 trillion cubic meters of natural gas and this will go up with all the exploration we are embarking on,” he said. “We are going downstream. We now cover the whole value chain. We are capturing the value through the whole value chain.

“Our partner in Yamal LNG is Total whose business model is to be a portfolio player like Shell. We have worked very closely with our buyers. We believe that given the volume of LNG we anticipate to produce based on our strategy, we hope to become a portfolio player ourselves by 2030 as we will have to create market share within the particular markets we are selling our LNG to.”

Matt Schatzman, President & CEO, NextDecade Corporation talked about the benefits of the U.S. gas scene.

“The main benefit is the abundance of natural gas that is available in the United States. In theory you really don’t need to lock in long term gas supply anywhere in the U.S. as you can buy it off the spot market.

“Not all U.S. LNG projects are the same and the big difference between our project and the other greenfield developers in the U.S. during this second wave is our proximity to a huge national gas resource base of the Eagle Ford and Permian Basin. Collectively the two of them hold 700 trillion cubic feet of gas. The important thing to note about this resource base is it associates gas with oil production. So the economics of our LNG project is based on oil prices not gas pricing.

The other important factor is where this is being produced in the state of Texas there are restrictions on flaring. You can flare for a short period of time but you can’t flare long term.

We need to find a home for the gas in order to produce the oil, where all the economic benefits lie.”