Post on 21-May-2020
“LNG: A fast track solution to meet South Africa’s Energy needs”
1
Port ElizabethMosselbay
Western Cape
Eastern Cape
Kwazulu-Natal
Limpopo
Gauteng
Northern Cape
North West
Free State
Mpumalanga
LesothoRichards Bay
Durban
East London
Johannesburg
Fossil Fuel Foundation Gas ConferenceJohannesburg , May 21 2014
CAUTIONARY NOTE
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this presentation“Shell”, “Shell group” and “Royal DutchShell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our”are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying theparticular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this [report] refer to companies over which Royal Dutch Shell plceither directly or indirectly has control. Companies over which Shell has joint control are generally referred to “joint ventures” and companies over which Shell hassignificant influence but neither control nor joint control are referred to as “associates”. In this presentation, joint ventures and associates may also be referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 23% shareholding in WoodsidePetroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements otherthan statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that arebased on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning thepotential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions.These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’,‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factorsthat could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statementsincluded in this [report], including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currencyfluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risksassociated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doingbusiness in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measuresaddressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation andrenegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs;and (m) changes in trading conditions. All forward-looking statements contained in this [report] are expressly qualified in their entirety by the cautionary statementscontained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results arecontained in Royal Dutch Shell’s 20-F for the year ended December 31, 2013 (available at www.shell.com/investor and www.sec.gov ). These risk factors also expresslyqualify all forward looking statements contained in this presenation and should be considered by the reader. Each forward-looking statement speaks only as of the date ofthis presentation, May 21 2014. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-lookingstatement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred fromthe forward-looking statements contained in this presentation.
We may have used certain terms, such as resources, in this [report] that United States Securities and Exchange Commission (SEC) strictly prohibits us from including inour filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. Youcan also obtain this form from the SEC by calling 1-800-SEC-0330.
THE CASE FOR GAS
Abundant global gas resources, growing and geographically diverse Conventional and unconventional recoverable gas resources can supply >250 years of current global gas production
CCGT: gas-fired power compared to coal:n 30% more energy
efficientn Emit around half the CO2
n CCS retrofit at similar cost per MWh
n Better complement to wind power
Replacing coal with gas for electricity generation is the cheapest and fastest way to meet CO2 reduction targets
CCGT cheapest to build
Similar total cost to coal and nuclear
ABUNDANT ACCEPTABLE AFFORDABLE
CCGT: Combined Cycle Gas TurbineTotal Cost = Capital + Fuel + Operating
Source: DECC (Mott MacDonald) June 2010
CCS: Carbon Capture & Storage
CAPITAL COST TOTAL COSTS
Source: IEA World Energy Outlook, WoodMackenzie, Shell Interpretation
North America
South America
Europe Eurasia
Middle East
Africa Asia Pacific
Conventional Gas ResourcesUnconventional Gas Resources
0 100 200 300
CCGT
Coal
Nuclear
Wind Onshore
Wind Offshore (25km)
Wind Offshore (75 km)
USD/MWh
SHARE OF GAS IN PRIMARY ENERGY MIX
THE SHARE OF NATURAL GAS IN THE PRIMARY ENERGY MIX IS EXPECTED TO INCREASE IN THE 3 LARGEST GAS MARKETS (MODERATE INCREASE IN OECD)
Source: WoodMac for USA and Europe, WoodMac and Shell analysis for China
USA EUROPE CHINA
OthersCoalNatural Gas Oil
2010 2030 2010 2030 2010 2030
~16,000~19,500
~14,000~16,000 ~17,000
~31,000Total primary energy (mln boe)
16%
38%
24%
22%
20%
33%
23%
24%
23%
36%16%25%
28%
31%
13%
28%
13%17%
66%
4%
14%
25%
51%
10%
WHAT IS LNG?
WORLD LNG PRODUCTION IN 2013 = ~242 MILLION TONNES
n Natural Gas production and separation from oil and water (when present)
n Natural Gas cooled to liquid state at -160oC and atm. pressure(volume reduced 600 fold)
n LNG transported over long distances in purpose built carriers
n LNG returned to gas state and injected into the transport pipeline network for distribution and sales
Source: Gas Matters
PRODUCTION LIQUEFACTION SHIPPING REGASIFICATION
COST EFFECTIVE ALTERNATIVE TO PIPELINE FOR DISTANCE > ~3000 KM
Copyright of Royal Dutch Shell plc
LNG DEMAND AND SUPPLY GROWTH
LNG DEMAND (mtpa) LNG SUPPLY (mtpa)
§ LNG demand will grow at ~5% pa doubling in size in the period 2010 to 2020
Source: Shell Analysis
0
100
200
300
400
500
600
2000 2005 2010 2015 2020 20250
100
200
300
400
500
600
2000 2005 2010 2015 2020 2025
India
Japan/ Korea/ Taiwan SE AsiaChina Europe
AfricaAustraliaAsia
MENACIS / Europe
Other AmericasQatar
GLOBAL LNG MARKET DEVELOPMENTS
LNG IMPORTERSLNG EXPORTERS
2010 2020
NUMBERS OF COUNTRIES IMPORTING LNG EXPECTED TO ALMOST DOUBLE BETWEEN 2010 AND 2020
#COUNTRIES 1990 2000 2010 2011* 2020 EST
EXPORTERS 8 12 18 18 ~25
IMPORTERS 9 11 24 25 ~40
Source: Wood Mackenzie LNG (April 2010)
* Source: PFC Energy (2011 Actuals)
SHELL’S GLOBAL LNG LEADERSHIP
Shell Global LNG Growth
Shell LNG Leadership
2013 ~2020+2007
Under constructionOptions
On streamRepsol LNG acquisition
2014
2013
2017Repsol acquisition (Jan 2014)
Copyright of Royal Dutch Shell plc
PLUTO (WOODSIDE)*
SAKHALIN II
MALAYSIA LNGBRUNEI LNG
NORTH WEST SHELF
* Indirect interest
QATARGAS 4 OMAN LNGQALHAT*NIGERIA LNG GORGON LNGPRELUDEWHEATSTONE
SHELL’S GLOBAL LNG PORTFOLIO
LNG - OPERATION
LNG - CONSTRUCTION
REGAS POSITION - OPERATION
EXPORT
SPAINHAZIRABAJA DUBAIELBA ISLANDALTAMIRA COVE POINTACC
ESS
TO K
EY
STR
ATEG
IC
M
ARKE
TS
ARKAT
SHIPPING
GREEN CORRIDOR
LNG FOR TRANSPORT
Copyright of Royal Dutch Shell plc
PROVEN CONCEPTS FOR LNG REGAS TERMINALS
Onshore in existing portAltamira, Mexico
Shuttle FSRU at STL buoy
Offshore at GBSGulf Landing, USA
Static FSRU Dubai, UAE
Onshore in new portHazira, India
Onshore at exposed coastal location with breakwaterCosta Azul, Mexico
Copyright of Royal Dutch Shell plc
DUBAI LNG – CAN RSA REPLICATE THIS MODEL?
Fully funded and owned by DUSUP (government company owning the gas pipeline grid)Offshore floating terminal – capacity 3 mtpa (400 mmscfd). LNG supplied on an ex-ship basisEnd gas consumers are Dubai government owned power generation and industrial customersShell provides critical value through:
— Fixed supply terms: 15 years (take or pay) and all of the contracted volume and rights to supply spot volumes
— Independent Technical Advisory Role— Initial design— Master Service Agreement from Shell to cover project
management, construction and execution — Operational support for first year (Golar operates the FSRU
and DUSUP operates the marine facilities)— Logistics support for future cargos purchases— Cost estimates for site/ port development and FSRU leased at
a day charter rate
TIMELINE
First engagements: Feb 2006
Selection of technical solution: Aug 2006
FSRU tendering start: Jun 2007
Comm. agreements: Jun 2007 to Apr 2008
SPA negotiations: Nov 2007 to Apr 2008
Investment decision: May 2008
Marine Const. Start: Jun 2009 – Oct 2010
FSRU conversion: Aug 2009 – Apr 2010
Commercial Start Up: Q4 2010
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POTENTIAL LNG DEMAND NODES
ANKERLIG OCGTCapacity: 1350 MWDate Commissioned: 2009Fuel type: Diesel Alt: KeroseneLocation: Atlatntis Industrial
Park, Western Cape
Mossel Bay
New CCGT IPP @ Richards Bay??
ACACIA OCGTCapacity: 171 MWDate Commissioned: 1976Fuel Type: Distillate Alt: NoneLocation: Goodwood, Western
Cape
GOURIKWA OGCTCapacity: 740 MWDate Commissioned: 2007Fuel Type: Kerosene Alt: Location: Mossel Bay, Western Cape
Cape Town
Saldanha
New CCGT IPP @ COEGA??Port Elizabeth
Western Cape
Eastern Cape
Kwazulu-Natal
Limpopo
Gauteng
Northern Cape
North West
Free State
Mpumalanga
Lesotho Richards Bay
Durban
East London
Johannesburg
GTL PlantCapacity: ca 1.5 Mtpa LNGFuel Type: Indigenous
condensateLocation: Mossel Bay, Western
Cape
Saldanha Bay
New CCGT IPP 2.0 GW @ SALDANHA?
CHALLENGES TO DEVELOP A LNG PROJECT IN SOUTH AFRICA
Lack of natural gas and LNG infrastructureRSA needs a coordinated approach to gas developments and gas strategy is required: GUMP a key elementDecision Making Process: Fast track decision making required for Fast Track LNG implementation Fine tuning of current regulatory legislation underwayProject Structuring: Integrated vs Segregated LNG to Power Value Chain
WHY PARTNER WITH AN EXPERIENCED LNG PLAYER
Proven track record of delivering LNG import projectsDeep understanding of the technical and commercial requirements are needed to develop a LNG importation project. Financial strength will be required to help finance the LNG projectWill enable local state/private companies to benefit from the transfer of technical/operations expertise Provides security of supply by having a diverse LNG supply portfolio
Copyright of Royal Dutch Shell plc
BENEFITS OF LNG IMPORTS FOR RSA
n Robust LNG supply market provides security of supplynFast track implementation (36 to 48 months) to produce powernProvides competitive base load Power GenerationnReplaces expensive diesel power generation and meets industrial
demandnComplements existing and future renewable power generationnCheapest power technology to meet RSA’s CO2 reduction targetsnDevelops the natural gas infrastructure and industrial markets ahead of
domestic natural gas production (offshore/shale gas)