德银-全球-液化天然气市场-繁荣、萧条与再繁荣的循环-20180112-20页_1mb

Deutsche Bank Markets Research Summary: LNG Outlook

Core Content

Deutsche Bank's research highlights the evolving dynamics of the global LNG market, emphasizing the transition from a period of tight supply and strong demand to a potential shift towards supply constraints by 2022. The analysis underscores the importance of demand drivers, particularly in Asia and Europe, and the implications for spot and contract prices.

Key Points

Near and Long-Term Outlook

• Demand Growth: LNG demand has been robust, with a notable 11% increase in 2017 and Asia leading the growth at nearly 12%.
• Market Tightening: The market has become tighter than anticipated, leading to strong spot prices and favorable outcomes for major LNG marketers like Shell and Total.
• Supply Outlook: The period of excess supply is shortening, with the balance point expected to shift towards a deficit by 2022.
• Price Trends: Spot prices are expected to moderate in 2018 as new supply comes online, but contract prices are likely to remain strong due to oil-linked pricing.

Buyers and Projects

• Buyer Behavior: Buyers are expected to contract more LNG as the market tightens, especially with Chinese and European demand showing strong growth.
• Project Challenges: New LNG projects are difficult to execute due to elevated costs, shortened contract lengths, and fragmented demand. The five-year build time suggests that investment decisions need to be made now to avoid future supply glut.
• Risk of Over-Supply: There is a risk that near-term supply surges could lead to a moderation in spot prices, potentially forcing buyers to reduce offtake to minimum contracted levels.

Key Players and Valuation

• Top Picks: Shell and Total are highlighted as strong investment opportunities due to their LNG exposure and strategic moves.
• Valuation Metrics:
  • Shell: P/E (x) 18.0 (2017E), EV/EBITDA (x) 6.02 (2017E), DB EPS (USD) 1.96 (2017E)
  • Total: P/E (x) 12.4 (2017E), EV/EBITDA (x) 12.81 (2017E), DB EPS (EUR) 3.88 (2017E)

Supply and Demand Projections

• 2018 Supply Growth: Expected to add 28mtpa, driven by projects in Australia, Russia, and the US.
• 2018 Demand Growth: Estimated to be around 10bcm (7mtpa), with Europe absorbing more due to increased LNG availability.
• Long-Term Supply/Demand: By 2022, the market is expected to broadly balance, with a potential short supply of 20mtpa by 2023.

Regional Insights

Asia

• China: Key driver of demand growth, with a 12mtpa increase in 2017. Expected to absorb more LNG in 2018, but potential slowdown could impact the market.
• Japan, Korea, and Taiwan: Stronger than expected offtake in 2017, but growth may moderate in 2018 due to nuclear recovery.
• India and Pakistan: India is expected to resume growth, while Pakistan's contracted gas suggests a 2-3mtpa uplift.

Europe

• Demand Growth: Europe has seen a strong recovery in gas demand, driven by coal switching and nuclear outages.
• Supply Growth: Expected to increase by 28mtpa, with Russia and Norway playing a key role in supply growth.
• Storage Role: Storage has been a critical factor in managing supply and demand imbalances, especially in the Chinese market.

Risks and Considerations

• Commodity Price Volatility: LNG prices are sensitive to oil prices and could fluctuate with market conditions.
• Project Delivery Risks: Many new projects face delays and increased costs, which could affect supply timelines.
• Investor Perception: The shift from oversupply to undersupply may change investor sentiment, especially as the market moves towards a supply deficit.

Strategic Recommendations

• Buy Exposure: The report recommends buying exposure to Shell and Total, given their strong positions in the LNG market.
• Focus on Long-Term Trends: Investors should look beyond near-term price pressures and consider the long-term potential of LNG as a key energy source.
• Monitor Project Development: The timing of new project decisions is crucial, with the report suggesting that investment should start in 2018 to avoid future supply issues.

Conclusion

The global LNG market is transitioning from a period of tight supply and strong demand to one that may experience a supply deficit by 2022. While the near-term outlook remains challenging, the long-term potential for upward price momentum is clear. Shell and Total are positioned well to benefit from this shift, and investors are advised to consider their exposure in the context of long-term market trends and project development.