Goodnight & Goodmorning!
Have attached the following link to an article that's "right on the money" in explaining in depth the whirlwind gathering of projects jostling for customers/ wrestling to reach FID! I've shared before but this clarifies perfectly...
https://www.ifri.org/en/publication...nergie/next-wave-global-lng-investment-coming
Timbo - Venture Global's 8mt worth of SPAs signed thus far may well be "call options" but keep in mind, their world class customers believe (Shell, BP, PGNiG) and being low cost @ $4.25B with EPC locked in (I believe)… its going to construction (as soon as FERC approval granted).
IDG's parked $25M in escrow ain't going nowhere when the 180 days comes to an end. You think IDG are investing for the short term for the sake of profiting a few bags of gold?? The saving grace (if wish to call it that) of the SP being this low means they would't dream of selling out. And talks of a TO are not justified - cornerstone investors who bought in at high prices are not going to allow such an occurrence to happen. They've bought the right to call the shots behind closed doors, to a certain degree!
We've highly likely focused a majority of our energy on targeting the Chinese, possibly to a lesser extent Japan, South Korea, Taiwan with minimal attention on Europe. I say minimal because Asian demand is running hot and will account for 2/3rds of future proposed capacity. I'm speculating but if this marketing strategy is adopted, unfortunately proceeding towards FID will experience delays - that's just the way the cookie has crumbled! Apart from Cheniere signing 2 long term contracts with Asian countries this year, you know how many other worldwide SPAs have been signed with Asia for next wave projects?
Zero!
Matt3, your comment, " the future looks to be that deals will be done for much shorter than 20 year periods and we'll be left out "... is incorrect. Evidence suggests otherwise with 8 20yr SPA contracts & 3 15yr SPA contracts locked in so far this year. Will also weigh in on your concerns that LNG LTD being a smaller operator in a mega scale dominated landscape could hinder our chances of becoming successful. Valid point - But there's going to be a couple of buyers willing to take an educated punt on our supposed low cost producing OSMR technology. IDG coming onboard was a bullish vote of confidence, who did their due diligence on OSMR at our testing facility. It was interesting how they arrived on our doorstep in the first place before investing... and although i can not reveal further, IDG is well connected that's all I'll say!
Foxdog - I like your measured thoughts, a wise head on your shoulders!
Your sentiment should be raised at the AGM, my 2 cents in bold;
I feel the time has come for management to explain where exactly we stand! The company released the following statement in the March 18' Quarterly, " though discussions & negotiations related to offtake remain confidential, we believe the progress we made toward selling LNG capacity at Magnolia LNG during the 3rd quarter of LNG's fiscal year will prove to be extremely valuable towards finalising sale agreements ". GV, do you stand by those comments or has the story changed? In this heated political environment, is IDG prepared to hold for the long run or could the trade war have an adverse effect on business dealings with the US? Whats our back up plan?
Will the Chinese sign when the tariff % is finalised & is a known quantity? What has IDG been doing in the background? To answer your first question, the reason stopping the Chinese from buying US LNG is not a financial one, its purely political! Most of the buyers are state owned, and the tariffs are collected by the state, so the state pays the state and consequently no impact! GV has mentioned that the China US hostilities could change on a moments notice so we remain ready & engaged with all customers. All eyes will be on the G20 Summit in Buenos Aires on Nov 30 when Trump talks with Xi Jinping, pray nightly that a resolution eventuates!
Although I am concerned as to how long this stalemate will last, IDG has provided a cash runway through till mid 2020
so as long as they continue to hold, we have plenty of time to reel in alternative buyers! They stand to lose a huge windfall opportunity if happen to sell out early - in excess of $350M @ $7 or $500M ++ @ $10 & over where that opportunity simply doesn't exist with other energy companies.
Don't feel shareholders have comprehended yet the magnitude of the next wave building. Over the last couple of years my research has uncovered a proposed 220mt (+) import capacity, that figure taking into account Utilisation Rates of those countries. Saad Sherida Al-Kaabi, President & CEO of Qatar Petroleum, stated in an interview with CNBC on Sept 17 18' - Reporter, " Does Qatar have an edge (in supplying the next boom)... what are the biggest threats, is it Russian gas or US supply of LNG? " Al-Kaabi
" there's a huge market that's available for everybody so i don't see huge competition or we take someone out of one market or another. Every country wants diversity of supply for their national security because this is really used for electricity, for homes so this is a national security issue ".
The price of oil has retraced over the past few weeks to settle at currently $75.60 (Brent Crude) from a high of $86.29 on Oct 3. Increased output from the US and easing fears the upcoming sanctions on Iran may not restrict their export capabilities as badly as first thought, have contributed to the decline.Volatile oil prices are on a knife's edge though which down the track
could see Brent Crude rocket past $100 from the following scenarios;
A) The US, Asian & European countries sanction Saudi Arabia who retaliate by turning off the taps and starve the world of vital supply. They are the world's largest supplier of around 7 million bpd providing the US with 1M bpd, Asia/ Pacific 4.8M bpd, Europe 780 bpd.
B) The US choking off Iran's exports by Nov 14
C) Pay close attention to 2 OPEC members, Nigeria and Libya, two nations heading into high stakes elections where output has swung wildly in recent years. In Nigeria, Africa's largest oil producer, a change of leadership threatens to unsettle the current government's arrangement with militants who wreaked havoc on the country's oil output two years ago. Libya - it's uncertain whether elections meant to resolve a long-running dispute between rival governments will bring an end to more than four years of civil conflict that has frequently disrupted the nation's crude exports. Their output production over the last 3 years has been 404,000 bpd (2015) 390,000 bpd (2016) 817,000 bpd (2017) . Any supply disruptions from the above conflicts will see significant rises in oil prices because the world is already undersupplied!
MB - can appreciate the flip side of the coin, holding management accountable for miss-guided targets and alluring wording in presentations/ quarterlies that have truly hooked investors. Can understand your reservations about his perceived personality attributes as well. G’s latest tweet, “ Our
outstanding COO speaking in London this week ”, is over-the-top (like another eg from above -
will prove extremely valuable) but he sincerely means it, that’s just his character and could maybe tone it down a notch! Having spoken at length with JB for a while he is impressive I assure you! Certain long term holders have been disgruntled for years though when it has not been warranted, those with limited understanding (not you and with due respect to all) of the macro environment and how the industry ticks. The luckless journey is frustrating but re-iterating, we simply arrived to the party to late when pre-filing with FERC in March 2013. Mr Brand did his best, it was his baby but GV is not responsible for why we've failed to secure customers! Dwelling on the past won't help... live in the moment and attack the future!
The signs are certainly there the next wave is taking shape in 2018 with LNG Canada taking FID, Venture Global's 7mt of SPAs signed in quick succession - Anardarko's 2 contracts for 1.5mt (+ 1 SPA for 2.6mt with PTT awaiting government approval) and the first ever Chinese contract signed with the US for 1.2mt (CNPC). At this stage though, it's nothing more than a ripple and holders should accept this and look towards 2019. The prospects next year of a vast array of diverse FIDs is very, very promising, i know I'm looking forward!
With VG now only needing 2mt to sell out capacity... Shell's Lake Charles LNG 15mt pushing back their construction deadline to November 1 19'... Next Decade's Rio Grande Terminal 4.5mt (seeking FERC authorisation by July 18 19') expecting to execute a final EPC contract by 3rd Q 19' after knocking back CB&I in September, while looking for another COO..... aside from Tellurian who's awaiting FERC authorisation by April 19', surely the next string of BTAs must be signed by us
?!
If you've made a serious investment and searching for answers on our current plight, there should be no reasons not to be at the AGM, work included. GV certainly needs to provide vision of the immediate future, reassurance we're still on the right path, to win back diminishing support of the faithful!
Our ant just needs to get one terminal built to make a significant mark in this market, re-inventing the way LNG is produced in a low cost manner. That’s a cool story to be part of
“ when ” we pull this off!!
Peace JK
