LNG

(Liquefied Natural Gas)

International Marketing Project

Submitted by: GROUP 4

Deep Tigga (20141015)
Ghanshyam Bhavsar
(20141021)
Jai Bakliya (20141026)
Ketan Gyanchandani
(20141028)

World Natural Gas Reserves

Sr.
No.

Country

TCM

%
Share

Russia

44.8

23.9

Iran

29.6

15.8

Qatar

25.3

13.5

Turkmenistan

8.0

4.3

Saudi Arabia

8.0

4.3

United States

7.7

4.1

United Arab Emirates

6.0

3.2

Venezuela

5.5

2.9

Nigerla

5.3

2.8

10

Algeria

4.50

2.4

World Natural Gas Production

Sr.
No.
1

Country

BCM

%
Share

U.S.A.

611.0

19.3

Russia

588.9

18.4

Canada

159.8

5.0

Iran

138.5

4.3

Qatar

116.7

3.6

Norway

106.4

3.3

China

96.8

3.0

S.Arabia

83.9

2.6

Indonesia

82

2.6

10

Algeria

80.4

2.5

World Natural Gas Consumption

Sr.
No.

Country

BCM

%
Share

United States

683.4

21.7

Russia

414.1

13

Iran

136.9

4.3

China

109.0

3.4

Japan

94.5

U.K

93.8

Canada

93.8

S.Arabia

83.9

2.6

Germany

81.3

2.6

10

Italy

76.1

2.4

Primary energy world consumption

Million tonnes oil equivalent

BP Statistical Review of World Energy

2012
BP 2012

Why LNG?-Environment
As explained earlier, gas is the most environment
friendly fossil fuel
With increasing awareness about Global warming and
need for managing Climate change there is rapid
increase in demand for gas in all parts of the world.
Hence increased need for transportation of gas across
regions.

Why LNG?-Regional demand supply

mismatch
Gas availability and demand at different centers are
different
There is need to transport gas across geographical regions
because of this
Gas in its natural form is very difficult to transport due to its
low density i.e. need for large volume transport which is not
economical
Hence there is need to reduce volume of gas for its easy and
economical transport
Gas when converted to LNG results in volume reduction by
600 times.

ADVANTAGES AND LIMITATIONS

OF GAS
LIMITATIONS

ADVANTAGES

Least environmental impact due

to low emissions of GHG, SOx and
NOx

Difficult to store and

transport

Possibility of high efficiency of its

usage in combined cycle power
plants and in cogeneration mode.
This further reduces
environmental impact for a given
demand for energy in economy.

Needs large investments

in dedicated infrastructure
for its transportation and
storage

Major gas trade movements 2012

Trade flows worldwide (billion cubic metres)

S.

BP Statistical Review of World Energy

2013
BP 2013

LNG Pricing Linear Relationship With Oil

LNG pricing linearly linked to crude oil price is the traditional LNG pricing formula in asia
PLNG = A * PCrude Oil + B
Where PLNG
A

= Price of LNG in USD/MMBTU

= Slope of Line

PCrude Oil = Price of crude oil in USD/ bbl

B

= Constant in USD/MMBTU

Typically A = 0.125 to 0.16 and B= 0.70 to 0.90

At A = 0.16 and B = 0, LNG is equivalent to cruder oil in USD/MMBTU terms

Gas Industry Structure and its impact on

LNG Pricing

Structure of gas industry has evolved much differently than oil industry and
hence both have different characteristics

Gas transportation is highly capital intensive and front end loaded and
hence relied on debt financing necessitating long term contracts for debt
servicing.

Gas is most commonly and in most cases most economically transported

through pipeline system and hence exhibit natural monopolistic
characteristic

These two factors account for lack of transparency in LNG price discovery
and absence of global and liquid gas market