Feed Gas

Feed Gas

👋

Paolo Poemape

start

1/17

01:30

Context

Feed gas usage:Serves as input material for Liquefied Natural gas (LNG), petrochemicals, and biogas Quick Facts:- 14% of LNG feed gas is used for liquefaction proccesses - Increase in LNG feed gas has been supported by an increase of high international demand, particularly Europe

2/17

01:00

Feed Gas impact in LNG Pricing

PLNG = PUS Hub + feed gas pipeline tariff + energy retainage + liquefaction costs + shipping cost

3/17

01:30

Total feed gas cost = wellhead gas price + pipeline tariff

Feed Gas Pipeline Tariff

Sudden Tariff hike (e.g. higher contract prices) results in higher feed gas cost

4/17

01:00

Total feed gas cost = wellhead gas price + pipeline tariff

Wellhead gas price

Factors influencing price:- Supply & Demand - Operational

5/17

01:00

Liquefaction Cost

One of the core components for LNG pricing- Fuel Gas - Power Consumption - Maintenance on turbines

7/17

01:30

Risk Management

Tools to manage our exposure to risk:- Hedging Price Risk:- Futures and swaps allow the company to lock in prices in the long-term- Portfolio Diversification:- Investment in physical storage to protect feed gas from external events- Redundancy in feed gas pipelines and hubs

8/17

00:40

Risk Management

Tools to manage our exposure to risk:- Contractual Risk Management:- Long-Term Sales & Purchase agreements - Risk Governance:- Stop-loss limits - Monitoring VaR performance daily

9/17

00:30

2020 vs now

10/17

00:30

2020 vs now

11/17

01:00

2020 vs now

12/17

01:30

2020 vs now

13/17

01:30

Landscape now

14/17

02:00

Landscape now

15/17

02:00

Landscape now

16/17

01:30

Takeaways

• Long-Term Sales & Purchase agreements to manage risk
• Europe will grow in demand as it tries to backfill their gas storages
• China and India are resilient in LNG demand

17/17

00:20

Thanks