LNG ECONOMIC MODELLING
A Four Day Seminar
The market for LNG has quickly grown as falling production costs and rising gas demand have driven new production and reception projects. The first LNG deliveries to the UK for twenty years began in July, 2005, and many forecasts see LNG meeting over 30% of UK gas demand in the next decade. Elsewhere around the world new terminals are being developed and existing ones expanded to meet a rush in LNG supply, while major LNG production projects are developing in every continent. Presented through a variety of different learning styles, the elements of this excellent four-day course have been designed to systematically build a good understanding of the global market and a confident approach to LNG economics.
Course
Objectives
This four-day course is designed to provide
delegates with an overview of the key issues in
modelling LNG economics. The course includes an
introduction to the LNG industry as a whole,
detailed analysis of each link in the LNG chain
and modelling strategies for these links, case
studies of real-life LNG projects, exercises in
modelling to reinforce the key commercial and
strategic issues covered.
Course
Structure
The morning of each day shall be used to
establish a theoretical foundation both in
terms of the industry and in terms of the
application of economic models to those areas
of the LNG Chain under review.
This will be followed in the afternoon with
practical application of this knowledge though
a series of economic modelling exercises as
follows;
- LNG Economic Model Module 1 – The liquefaction terminal costs.
- LNG Economic Model Module 2 – The shipping costs.
- LNG Economic Model Module 3 – The regasification terminal costs.
- LNG Economic Model Module 4 –
The LNG Trading Game:
As a great way of consolidating the learning programme, delegates take part in the LNG Trading Game. Held during the afternoon of Day 4, this popular game introduces an element of fun offering the chance for demonstrations of financial skill and dynamism.
Delegates are allocated to one of five businesses which are either sellers or buyers of LNG each having specific portfolios of gas supplies and customers. The delegates are then able to trade LNG spot cargoes to meet the requirements of the market.
Good risk strategy, market understanding and teamwork will gain the advantage offering a real-world simulation in a safe setting.
The LNG Trading Game
Course
requirements
The course has been designed to allow
delegates with little of no prior knowledge of
economic modelling or the LNG business,
although clearly any knowledge of either area
would be useful. The exercises will be based on
Excel spreadsheets and therefore, while access
to PCs will be provided, a general knowledge of
Excel would be helpful, but not essential.

Download course outline (1.4MB) pdf
-
An Introduction to LNG Modelling and Liquefaction
- An Introduction to Modelling
- Types of models
- Financial modelling
- Using spreadsheet models
- Scenario analysis
- The uses and limitations of models
- An introduction to the LNG chain
- Production
- Liquefaction
- Shipping
- Storage
- Regasification
- Sales
- Liquefaction
- Technology
- Costs
- Expansion vs Greenfield development
- Modelling liquefaction costs
- Discussion and questions and answers
- Case Study on Liquefaction Facilities
- Exercise 1 – Briefing and and work in syndicate groups on modelling the liquefaction terminal
-
Project Structure and Shipping
- Upstream gas production
- Production sharing contracts
- Royalty and tax regime
- Economics of production
- Transfer pricing
- LNG projects and producers
- Major players and projects
- Case study of a major project
- LNG Project Structure
- Integrated projects
- Throughput arrangements
- Tolling agreements
- Project financing
- Case studies
- Impacts of project structure on modeling
- Discussion and questions and answers
- Shipping
- Shipping strategies (Build, own, charter, lease)
- Competing ship designs (Kvaerner-Moss vs Membrane, Steam or gas turbine)
- Fuel sources and regas facilities
- Competing yards
- Modelling shipping costs
- Ship size and fleet size
- Costs (Ship prices, Port fees, Fuel, Suez Canal fees)
- Fuel price arbitrage
- Schedules and diversions
- Exercise 2 – Briefing and and work in syndicate groups on modelling shipping costs
-
LNG Terminals and Supply
- Receiving terminals and storage
- Construction of regasification terminals
- Project structure
- Costs, timescales and planning
- Size of tanks and value of storage/flexibility
- Modelling terminal capital costs
- Terminal operations
- Key processes
- Unloading and regasification
- Flexibility and storage
- Schedules and interface with gas network operator
- Boil-off gas
- Modelling terminal operational costs
- LNG markets
- Overview of key LNG markets
- Asia-Pacific
- USA
- Europe
- Discussion and questions and answers
- Exercise 3 - Briefing followed by work in syndicate groups on modelling regasification terminal costs
- Regasification and supply
- LNG contracts
- Balancing and other issues
- Access to infrastructure
-
Pricing and Trading
- Pricing LNG
- Regional pricing structures
- Typical pricing clauses
- Oil price indexation
- Pipeline gas pricing
- Modelling prices
- Short-term trading
- Types of trading
- Contract structures
- Arbitrage patterns
- Trading issues
- Trading price trends
- Impact of trading on models
- Risks
- Regulatory risk
- Operational risk
- Technical risk
- Legal risk
- Factoring risk into the model
- Discussion and questions and answers
- Exercise 4 – LNG Trading Game
- Case study – Modelling the LNG Chain
- A summary case study
- Modelling future energy markets
- Modelling future methods of trading
- Oxford: 7th - 10th June 2010
- Oxford: 7th - 10th December 2010
We reserve the right to change the venue, dates and programme at our discretion.
(overnight accommodation is not included in this price.)
CPD Credit now available for all participating Solicitors* and Accountants**
*All of our courses are CPD accredited by IGEM
(The Institute of Gas Engineers and Managers)
and The Solicitor's Regulation Authority.
**Attendance may also contribute to meeting
requirements under the terms of the ICAEW's CPD
policy for accountants. (Visit www.icaew.co.uk
for full details).
