LNG to power : LNG as a key driver for new power generation projects in developing markets

Abstract

Global gas companies have commercial departments specialized in finding new markets suitable for future sales of Liquefied Natural Gas. The process of creating a contract for a potential counterparty asks for thorough examination of the country, regulation, and its gas and power system and estimation of the potential demand. After the decision has been made that the counterparty is a country reliable for this kind of business and that the demand is sufficient, gas companies struggle with defining the price of LNG that would be competitive for this market. They need to make series of decisions, including the supplying region which will be used. This is a crucial factor for determining analyzing the costs of providing LNG to a particular region and the final price that will be offered. This master thesis firstly introduces the reader with Power, Natural Gas and LNG industry and their interconnections. It provides current and historical overview as well as future projections. The main focus of this part is LNG Industry, precisely LNG Value Chain, it’s theoretical explanation as well as global market overview that include current trends, graphical representations that are the best way for a reader to understand that LNG plays a significant role in global gas supply as well as in power generation projects and that this role will be strengthen in following years due to the innovations in the sector. Second part is focused on the analysis of three countries which are considered to be suitable markets for LNG-to-Power projects. These countries were analysed in the following way: firstly country overview is given, followed by power sector analysis with focus on thermal generation and current fuel supply. An estimation of demand for LNG was made and the regulatory framework closely related to LNG was done. Ending refers to estimation of costs and analysis of costs vs. electricity or competing fuel prices. This has an aim of helping LNG suppliers when deciding on the proposed price for which they would offer LNG to a potential buyer. This framework is an original work and it can be used for analysing other markets for the sales of LNG.