Baltic LNG Project as a trend-setter in Russian LNG Industry - Sander Stegenga, VP Baltic LNG Project - International ...
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Baltic LNG Project as a trend-
setter in Russian LNG Industry
January 29, 2019
Sander Stegenga,
VP Baltic LNG Project
Royal Dutch Shell plc CONFIDENTIAL
Definitions & cautionary note
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be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and
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statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking
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We may have used certain terms, such as resources, in this presentation that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our 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. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
2
The race to commission new LNG projects is on
Up to 150 mmtpa of new capacity is targeting to be endorsed in the next two years.
Five key conditions to reach FID:
§ Compelling project economics and competitive LNG price into the markets
§ Proven technology, Robust design and Engineering, Efficient and Competitive execution
§ Approval Process
§ Partner Alignment
§ Marketing and Finance (Project Financability)
Royal Dutch Shell plc 3
Russian gas will play an increasingly global role in foreseeable
future, influencing gas markets in EU and Asia
Largest exporter of natural gas (~200 BCM)
RUSSIA
Largest commercial gas reserves (~ 48 TCM)
IN THE WORLD
2nd largest producer of natural gas (~640 BCM)
n Three major LNG production centers are emerging in Russia – in the East, Arctic zone and the
West
n Russia with 5% share of the global LNG market is currently underrepresented relative to its
vast gas resource base; historically, it was focused on gas pipelines
n By 2030 Russian LNG estimated to grow four times, reaching 14% of global liquefaction
capacity
n Russia still has a lot to catch up with the competition – namely US and Qatar
Royal Dutch Shell plc CONFIDENTIAL
Sakhalin-2 is the FIRST LNG project in Russia and one of the most
reliable and efficient in global LNG industry
Royal Dutch Shell plc CONFIDENTIAL
Baltic LNG Project as a trend setter in Russian LNG industry ! Baltic LNG will be the first project in Russian LNG industry with a radical new approach to large scale LNG facilities - design, engineering, material and equipment definition will be done based primarily on national (Russian) technical norms, standards and specifications ! Transforming LNG design to Russian norms-based design is an enormous task with associated challenges and risks ! This approach will allow to ensure unprecedentedly high level of the Russian Content through tapping into a larger pool of Russian vendors able to supply at competitive prices against familiar norms and specifications ! Gazprom brings its knowledge of Russian suppliers; Shell brings its experience in LNG to ensure that this vision can be executed in practice Royal Dutch Shell plc
The project with robust technical and commercial foundations
n The Joint Feasibility Study completed in May 2018 is a solid basis to make Baltic LNG economically attractive
and competitive with other proposed projects on the LNG market - provided it enjoys the fiscal regime and
government treatment comparable to those of competing projects in the US Gulf and Russia
n The Baltic LNG project has a robust technical and commercial foundation, and will become a flagship project
for Gazprom and Russia in terms of quality of its execution, high Russian content, development of Russian
technology and engineering capabilities
n The technological concept and the production/economic model found by Gazprom and Shell for the Baltic
LNG project provide opportunities for their repeated use, as proven methods, in developing other potential
large-scale LNG projects in the Russian Federation, significantly enhancing the investment potential of new
projects and greatly facilitating their implementation
Royal Dutch Shell plc
Baltic LNG is a competitive project with a new business model
! In the Joint Feasibility Study base case, the plant
UGS will be the first large-scale LNG project in Russia
BALTIC
LNG
receiving feed gas from the Unified Gas
Average Supply 22 BCMA
Transportation System
! Most optimal technical parameters defined for
Gas/NGL/LNG
plant Baltic LNG; Air Cooling, Mechanical Refrigerant
Compressors Drivers and increase of production
capacity of each train up to 6.5 mtpa or slightly
Condensat CS higher
«SLAVYANSKAY
e
0.02mtpa
A»
! The design developed by joint Shell and
Gazprom study work resulted in highly
LNG NS-2 competitive cost for the project
13+mtpa
Base Case (JFS scope) Source: RGD
Royal Dutch Shell plc CONFIDENTIAL
Unprecedented level of localization,
Russian LNG technology
n At St Petersburg International Economic Forum-2018,
Gazprom and Shell signed Framework Agreement to
establish a technology joint venture (TJV) in Russia to
hold and license the Russian Developed Technology
for use in Russian LNG Project Companies and
provide services to LNG projects
n Russianazed LNG technology
Royal Dutch Shell plc CONFIDENTIAL
Summary
! Many potential destinations with growing gas demand cannot be reached by pipeline gas –
Far East, Atlantic Basin, South East Asia
! Great opportunities for Russian LNG but a lot still has to be done to catch-up in a very
competitive market
! Baltic LNG will be more Russianized than its predecessors – using Russian technical norms,
standards and specifications thus helping to make a step-change in Russia’s LNG industry
! Its advantages are feed gas from UGT system, prime geographic location, and very
competitive technical concept
! To make the most of these advantages, Baltic LNG needs a ‘level playing ground’, i.e. fiscal
regime and government treatment comparable to competing projects in US Gulf and Russia.
Royal Dutch Shell plc CONFIDENTIAL 10You can also read
