With LNG continuing to play a bigger role in the global energy mix and with the market expected to grow approximately 5% each year, according to IEA, it is a time of opportunity for the industry. As the US is forecast to overtake Qatar by mid-2020 to become the world’s largest LNG exporter, Gastech Insights spoke with industry leader Tellurian to find out more.
Part of the Executive Advisory Board and speaker at the CEE Gas Conference this March in Zagreb, Dr Anita Orban, Vice President at Tellurian shared her views on the current LNG projects in the region and exactly how LNG will evolve the market.
Gastech Insights: What does LNG mean for gas players in the Central and Eastern European region?
Anita Orban: LNG means diversification, supply security and access to a global market. LNG can bring the long-awaited supply source, price and route diversification which has been driving the energy policy goal of the Central Eastern European governments for almost a decade. Countries in the region can only benefit from a real competitive market thanks to LNG. The LNG market developed tremendously in the last 10 years with numerous new suppliers emerging primarily in the US and Australia bringing with them new business models, pricing and indexation. Additionally, the entry barriers into the LNG market from a customer point of view are much lower than before thanks to the spread of FSRUs all over the world.
Gastech Insights: With new project infrastructure emerging all over the region, why should Central, Southern and Eastern Europe buy LNG from Tellurian?
Anita Orban: Tellurian’s unique equity participation model offers a ~$1,500 per tonne equity interest in Driftwood Holdings. Driftwood Holdings will consist of Tellurian Production Company, Driftwood Pipeline Network and Driftwood LNG terminal (~27.6 mtpa). Partners will receive equity LNG at the tailgate of the Driftwood LNG terminal at a cost expected to be ~$3.00/mmBtu FOB. This integrated model provides supply optionality and competitive LNG through the commodity price cycle. Our management has an unmatched track record of delivery backed by a LSTK EPC and well-established relationships with Bechtel, Chart and GE.
Gastech Insights: What were the biggest challenges before the Krk LNG terminal project?
Anita Orban: For the Krk LNG project to succeed it has to generate sufficient capacity booking. By far, the largest gas consumer in the region is Hungary. For the Hungarian buyers to find the project attractive, it has to compete with alternative gas sourcing opportunities, and for that purpose, the most crucial factor is the tariff from regasification via transmission in the Croatian system through the entry to Hungary. The tariff has to be competitive enough to make the project attractive to all the potential buyers, including the Croatian and Slovenian buyers, as well as, buyers further downstream.
There have been several new entrants into the LNG market in the last few years and some countries managed to do their own projects in a record time. Experience of the new buyers has been very positive. Egypt executed a second FSRU project right after the first one and Polish Gaz System announced extending the capacity of the regas terminal in Swinoujsce. I hope that the CEE region will be one of the new entrants into the market in the early 20s and LNG will open a new opportunity of trading with gas, building a gas portfolio and energy security for countries of the region.
Gastech Insights: What are you most looking forward to at CEE Gas Conference in March 2018?
Anita Orban: Learning about the status of play and great progress made by Croatia LNG since the CEE Gas Conference in 2017 and discussing Tellurian’s business model with all the potential new buyers in the LNG market.
Dr Anita Orban will be speaking at this year's CEE Gas Conference, taking part in the discussion, 'What impact will LNG have on the CEE gas and electricity markets?" Be sure to register now to hear industry experts discuss and debate the evolving region's gas market.
Image courtesy of Tellurian
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