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Course Outline

  A Review of the LNG Industry Download Course Brochure
  Overview of global natural gas and LNG industry
  • What is LNG?
  • Overview of the global natural gas and coal seam gas industry and reserves
  • Natural gas duration to depletion
  • Australian LNG projects – NW Shelf and the Surat and Bowen Basin
  • Overview of Australian LNG export markets of LNG: South Korea, Japan and China

Overview of natural gas price trends

  • Introduction to recent price trends in natural gas and LNG markets
  • Global trends in production, consumption and international trade
  • Overview of the spot price trends for Henry hub, UK’s NBP and the Japanese JCC and LNG prices in China
  • The Chinese economy and the Rule of 70 and role of the BRICS countries on global natural gas prices
  • Price impact of the March 2011 Japanese earthquake and tsunami on Japanese LNG

Oil and gas price coupling

  • Oil – natural gas price coupling
  • Energy Equivalent Pricing (EQP) and natural gas spot pricing
  • Coupling “rules” for natural gas pricing
  • Activity: Recent coupling trends and its impact on the price of natural gas

Forecasting natural gas prices

  • Forecasting natural gas prices
  • Spot market prices v’s futures prices
  • The convergence theory of price
  • Forecasting the spot price of natural gas
  • Activity: Forecasting selected natural gas prices to 2017

LNG price determination

  • Determining the price of LNG and CBM for LNG
  • The role and application of the EQP
  • Simple “S” curve LNG price models
  • Developing more complex LNG price formulas

Resource ownership in Australia

  • Crown ownership of natural resources
  • Granting instruments: royalties and concessions, profit sharing

Agreements, gas sharing agreements

  • The Sakhalin 11 PSA
  • The Petroleum Resource Rent Tax (PRRT), 2012

Project evaluation tools

  • Introduction to Time Value of Money (TVM)
  • Application of TVM concepts to different natural gas examples
  • Introduction to spreadsheet modelling using excel
  • Development of excel based TVM examples
  LNG Capital Budget Analysis

Capital budget tools

  • The role of cost of capital, discount rate and PSA / GSA
  • The payback period
  • NPV, IRR, & MIRRs
  Background to the business model of LNG projects
  • Role of Joint Venture partnerships in LNG and examples
  • Gas hubs vs FLNG
  • What is FID?
  • Importance of SPA, and “take or pay” contracts
  • Large expense financing options
  • Accounting definition of expenses: Capex and opex
  LNG project expenses: Capital and operational – Part 1
  • Detailed capex line item expenses associated with an LNG project
  • Detailed opex line item expenses associated with an LNG project
  Financial modelling
  • Development of the excel based financial model using excel built in tools
  • Identification of
    > capex line items
    > opex line items
    > Individual income line items
  • Insert long range natural gas forecasts into the model
  • Alter the basic assumptions underlying the model: Natural gas price, discount rate and accommodate expected inflation over the life of the project
  Assess competing LNG projects
  • Assessing multiple LNG projects
  • Application of probability theory and Decision Tree Analysis
  • Examples of the application of multiple projects
  Final overview of the LNG project
  • Review the financial viability of the LNG project in the light of opex, capex and discount rate and government taxes, concessions contained in the PSA
  • Review the status of the global macro-economy are members of professional associations, our courses are eligible for Continuing Professional Development (CPD)
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