Assessing Public Transportation Vulnerability to Sea Level ...
Gkonis - The Economics of Oil and Gas Sea Transportation
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Transcript of Gkonis - The Economics of Oil and Gas Sea Transportation
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The economics of Oil & Gas Sea TransportationABSTRACT
Dr K.G.GkonisResearch DepartmentBarry Rogliano Salles
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Presentation layout
�Oil & Gas sea transportation in a global context
�Main aspects and idiosyncrasies
� The economics of energy shipping� The economics of energy shipping
� Reflections on latest and upcoming developments
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Taking a global view
� The economics of the SHIPPING industry are closely associated with GLOBAL economic developments
5,0%
10,0%
15,0%
World GDP Growth vs Trade
World GDP
World Trade
Seaborne Trade
developments
� …even more so when we are talking about ENERGYcargoes(add the GEOPOLITICS of energy dimension)
-15,0%
-10,0%
-5,0%
0,0%
2008 2009 2010 2011 2012*
* prospects
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Taking a global view
Shipping rates are not irrelevant to global economic indicators
100
110
120
950
1000
1050
1100
US
D/b
bl
an overall noticeable correlation, but tanker
market systemics (e.g. ships supply-demand)
can have a disturbing effect
BDTI WTI spot
price
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70
80
90
600
650
700
750
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900
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Main aspects and idiosyncrasies of Oil & Gas shipping
ENERGY cargoes (Crude Oil, Products & LPG, Steam Coal, LNG)
Oil and Liquefied Natural Gas shipping: similar, yet so different as two extremes
� Some similarities
� Both liquid cargoes transported with tankers� Both liquid cargoes transported with tankers� Both with international “energy- critical” trade patterns
� Many differences
� Oil: traditional and established / LNG: developing, the future� Oil: perfectly competitive and fluid / LNG: rigid structure� Oil: many players / LNG: few layers , “closed” club� Oil: not expensive to transport / LNG: the most expensive bulk
shipping segment
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� The energy trades dominate (more than 50%) bulk shipping (the international shipping industry is responsible for the carriage of about 90% of world trade)
� The cost of carrying small cargoes is much higher than the cost of large cargoes: economies of scale dominate shipping economics
The economics of energy shipping
Oil tankers LNG carriers
Source: hofstra.edu
Oil tankers LNG carriers
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� The mechanisms
The economics of energy shipping
the Newbuilding market
the Sale & the
• Steel prices• Shipyards
industry• Scrapping
industry
• the money markets (shipping finance)
the Sale & Purchase
market
the Freight market
the Demolition
marketThe Shipping
Business
• World economy (growth, recession, regional patterns)•Energy industry (oil production, refining, regional demand, other sources)
•“Crises” (geopolitical, military)•Charterers behaviour
•Operating costs, voyage costs � BUNKER PRICES
other segments
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Reflections on latest and upcoming developments
In the CRUDE OIL SHIPPING market
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CRUDE OIL PRODUCTION* (‘000 CRUDE OIL PRODUCTION* (‘000 bblsbbls / / dayday))
N.America
Europe & Eurasia
M. East
* based on BP data for 2010
S.& C.America
M. East
AfricaAsia - Pacific
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REFINERY CAPACITIES* (‘000 REFINERY CAPACITIES* (‘000 bblsbbls / / dayday))
N.America Europe & Eurasia
* based on BP data for 2010
Africa
S.& C.America
M. East
Asia - Pacific
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700
800
900
1000
1100
1200
120
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160
180
(m. USD)(USD/tonne)
(USD/ldt)
Low newbuilding prices offer investment opportunities in crude oil tankers
VLCC newbuilding prices failed to catch an upward trend during the last year (shaded area), and instead experienced a consistent downwards
200
300
400
500
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700
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100
120
01/2
008
07/2
008
01/2
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07/2
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01/2
010
07/2
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01/2
011
07/2
011
VLCC newbuilding price (320,000 Dwt) (LH axis)
Tanker demolition price (Pakistan/India) (RH axis)
Steel price (Hot Rolled Coil) (RH axis)
12
/20
11
a consistent downwards path.
This was otherwise the case for the other tanker sizes as well
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ALREADY DELIVERED TO BE DELIVERED
TANKER DELIVERIES PER SHIPYARD
...and one should also keep in mind what is happening in the shipyards
S. Korea holds 49% of all tanker orders , China33%, Japan 8% .
Comparing deliveries since 2008 to the since 2008 to the pending orderbook, an expansion in volume is witnessed only for a couple of shipyards.
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40
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60
70
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90
4
5
6
7
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9
No
of
ship
s
Dw
t To
nn
ag
eM
illi
on
sTanker flags (2010 & 2011 Deliveries)
Then decide on other issues
Most flags attracted less tankers in 2011, but this should be expected given the reduction by more than 20% of
0
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20
30
40
0
1
2
3
4
No
of
ship
s
Dw
t To
nn
ag
e
Dwt 2010 (LH axis) Dwt 2011 (LH axis)
Ships 2010 (RH axis) Ships 2011 (RH axis)
more than 20% of deliveries (all tanker categories).
Greek flag (11th from 7th place, with 65% less tonnage and 77% fewer tankers).
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What happened in Year 2011 after all
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100 000
120 000
Tanker Annual Average TCE Earnings
VLCC 260,000 T MEG/KOREA SUEZMAX 130,000 T WAF/US AFRAMAX 100,000 T BALT-UK/CONT
US$/day
13,7
11,8
7,7
11,3
3,3
8,1
11,1
16,2
20,6
7,2
21,4
27,6
16,9
15,2
Aframax 80k dwt
EMED/WMED
Aframax 100k dwt
BALT/CONT
Suezmax 130k dwt
CROSS-MED
Suezmax 130k dwt
Average Daily
TCE earnings
2010 - 2011
0
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40 000
60 000
2007 2008 2009 2010 2011
8,0
-5,0
8,7
3,1
-7,5
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13,1
-2,5
11,1
31,2
16,6
21,4
-10 0 10 20 30 40
AVERAGE 2010 AVERAGE 1st sem.2011
AVERAGE 2nd sem.2011 AVERAGE 2011
'000s
USD/day
Suezmax 130k dwt
WAFR/US
VLCC 275k dwt
MEG/CONT
VLCC 260k dwt
MEG/KOREA
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What happened in Year 2011 after all
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140
160
180
(m. USD)
TANKERS NEWBUILDING PRICES
(Monthly)
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09/9
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05/9
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5
09/9
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05/9
6
01/9
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09/9
7
05/9
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01/9
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09/9
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01/0
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09/0
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01/0
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09/0
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05/1
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01/1
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09/1
1
51,000 Dwt 115,000 Dwt 157,000 Dwt 320,000 Dwt
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Reflections on latest and upcoming developments
In the LNG SHIPPING market
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The LNG chain
Source: Shell
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LNG economic aspects
• A 150,000 cu.m. LNG carrier transports:~ 62,000 tons LNG or ~ 0.09 bcm of natural gas
300
325
350
LNG CARRIERS AVERAGE NEWBUILDING PRICES
138-147,000 cbm
(million US$)
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150
175
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275
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LNG PRICES
LNG prices usually expressed in US dollars per millionBTU (USD/mmBTU).
No international price for LNG. Gas “hubs” of both LNGand pipeline gas:
•United States (Henry Hub)
•The United Kingdom (NBP)•The United Kingdom (NBP)
•Europe (Zeebrugge in Belgium)
Long-term: gas prices driven by gas supply options, economic growth and political issues
Short term: depend on storage and flexibility
�Opportunities for price arbitrage and eventualconvergence of price between various markets
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Recent developments
� Japan earthquake – tsunami catastrophe: nuclear off, LNG annual imports increased by 12.2% (to 78.5 m.tons in 2011)
� US shale gas discoveries� West –East gas price differentials: below 4 USD/mmBTU to above
14 USD/mmBTU
a few years ago
Price arbitrage now
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The Greek element
357
250
300
350
400N
o o
f sh
ipsGREEK PRESENCE IN GLOBAL FLEET
GREEK
OWNERSHIP
ALL
12
28
66
0
50
100
150
200
DELIVERED ON ORDER
No
of
ship
s
3% of
TOTAL 42% of
TOTAL
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