CAMERON LNG

STAVROS RIFIOTIS, MAX TANG, EDOUARD LOTZ, DAVID

EBANEHITA,
VICTORIA DI PACE, ALEXANDRE SOARES

FEBRUARY 21, 2019

 PROJECT DESCRIPTION
• LIQUEFIED NATURAL GAS (LNG) TERMINAL NEAR THE GULF OF MEXICO, IN
HACKBERRY, LOUISIANA
• BROWNFIELD PROJECT DEVELOPMENT USING EXISTING LNG TERMINAL
FACILITIES (LNG TANKS, MARINE BERTHS AND ASSOCIATED FACILITIES)
• JOINT VENTURE BETWEEN:
 PROJECT FINANCING
• 25% EQUITY
• 3 LARGE JAPANESE BANK: $5BILLION
• MITSUBISHI
• SUMITOMO MITSUI
• MIZUHO

• ABOUT 25 OTHER BANKS: $2.5BILLION

• HSBC
• SOCIETE GENERALE
• ING
• ETC…

• 16 YEARS NO-RECOURSE LOAN

• 150 BASIS POINTS MORE THAN LIBOR

SOURCE: 2014 BLOOMBERG

 FEEDSTOCK AVAILABILITY (LOW RISK)
• CAMERON INTERSTATE PIPELINE, AN
EXISTING 42-INCH DIAMETER
PIPELINE, WILL BE REVERSED AND
EXPANDED

• COLUMBIA GAS TRANSMISSION WILL

CONSTRUCT THE
“CAMERON ACCESS PROJECT”,
WHICH WILL BE A 36-INCH DIAMETER,
27-MILE PIPELINE EXTENSION TO THE
CAMERON
SOURCE: 2014 SITE
CAMERON LNG PROJECT PRESENTATION
 POLITICS AND GEOPOLITICS (LOW RISK)

• BOTH THE OBAMA & TRUMP ADMINISTRATION NATURAL GAS TRADE U.S. 2050
HAVE BEEN IN FAVOR OF US ENERGY EXPORT PROJECTION

• DESPITE CURRENT TRADE CONFLICT WITH

CHINA, ONE OF THE LARGEST AND GROWING
LNG MARKET, THE U.S. IS ON RELATIVELY
GOOD TERMS WITH IT OTHER LNG TRADING
PARTNERS

SOURCE: EIA, 2018 ANNUAL ENERGY OUTLOOK

 ENVIRONMENTAL REGULATION (LOW RISK)

SIMILAR LNG PROJECTS FROM THE LOWER 48 U.S. STATES (APPROVED & IN OPERATION)
• FREEPORT LNG
• SABINE PASS LNG
• CORPUS CHRISTI
BENEFITS OF CLEANER BURNING NATURAL GAS
• COMPLEMENTARY WITH RENEWABLES: FLEXIBLE GAS GENERATION COMPLEMENTS INTERMITTENT
• RENEWABLES, ENSURING RELIABLE POWER SUPPLIES
• LOWER CARBON INTENSITY THAN OTHER FOSSIL FUELS – APPROXIMATELY 50% LESS THAN COAL
•  SIGNIFICANTLY LOWER TRADITIONAL POLLUTANTS, INCLUDING NOX, SOX, PMS AND HAZARDOUS
AIR POLLUTANTS, HELPING IMPROVE AIR QUALITY
• COST-EFFECTIVE, RELIABLE AND DELIVERABLE SOLUTION

SOURCE: 2018 CHENIERE CORPORATE PRESENTATION

 DOMESTIC GAS NEEDS (LOW RISK)

• SHALE GAS REVOLUTION

• NATURAL GAS PRODUCTION ACCOUNTS
FOR NEARLY 39% OF U.S. ENERGY
PRODUCTION BY 2050 IN THE
REFERENCE CASE. PRODUCTION FROM
SHALE GAS AND TIGHT OIL PLAYS AS A
SHARE OF TOTAL U.S. NATURAL GAS
PRODUCTION IS PROJECTED TO
CONTINUE TO GROW BECAUSE OF THE
LARGE SIZE OF THE ASSOCIATED
RESOURCES.

SOURCE: 2018 EIA ANNUAL OUTLOOK

 PARTNER PRIORITIES (LOW RISK)

• JAPAN NEED TO SECURE STABLE SUPPLY OF AND TO REDUCE PROCUREMENT COST OF

LNG
• CONSISTS OF OVER 40% OF JAPAN'S POWER ENERGY MIX ALTERNATIVE SOURCE
FOR FUEL
• A NUCLEAR INDUSTRY SHUTDOWN FOLLOWING THE 2011 FUKUSHIMA DISASTER
SOURCE: •2014
"STRATEGIC ENERGY
JBIC PRESS RELEASE PLAN" APPROVED BY THE CABINET IN APRIL 2014
 PROJECT ECONOMICS (LOW RISK)

• THE TRANSACTION IS THE SECOND-LARGEST PROJECT FINANCING IN THE

UNITED STATES AND WAS HONORED WITH NUMEROUS ACCOLADES,
INCLUDING “DEAL OF THE YEAR: AMERICAS” BY TRADE FINANCE IN 2014.

• SEMPRA ENERGY'S SHARE OF FULL RUN-RATE EARNINGS FROM THE FIRST

THREE TRAINS AT CAMERON LNG ARE PROJECTED TO BE BETWEEN $365
MILLION AND $425 MILLION ANNUALLY.

SOURCE: 2014 CAMERON LNG PROJECT PRESENTATION

 ABILITY TO EXECUTE (MEDIUM RISK)

• THE U.S. LNG INDUSTRY ONLY STARTED 5YEARS AGO

• CURRENTLY ONLY 3 U.S. LNG TERMINALS ARE IN OPERATION AS OF TODAY
• SABINE PASS LNG
• CORPUS CHRISTI LNG
• FREEPORT LNG

• LACK OF INDUSTRY KNOWLEDGE

• LACK OF HUMAN EXPERTISE

• CHEAP AND SUFFICIENT FINANCIAL CAPITAL

 MARKET (LOW RISK)

• 15-25 YEARS LONG-TERM CHARTER CONTRACTS FROM MAJOR JAPANESE

SHIPOWNERS WITH MITSUI & CO TO BUY LNG FROM THE CAMERON
LIQUEFACTION FACILITY
• K LINE
• MITSUI OSK LINES
• NYK (NIPPON YUSEN)

• OVER 80% OF ITS CAPACITY HAS BEEN GUARANTIED AS OF TODAY

SOURCE: 2015 SEATRADE MARITIME NEWS

SWOT ANALYSIS & OVERALL (LOW RISK)
Strengths
- Resource is widely available
(shale revolution)
- Political support for LNG export
- Strong Partnership
- Inexpensive financial capital
Opportunities
- Increase in global LNG demand
due to environmental concerns
- Low Henry Hub Price relative to
the world
- Trade conflict with China
subdues
Weakness
- Inexperience in the LNG
export sector
- Difficulty to acquire key
human capital
- Steep learning curve
Threat
- Trade conflict with China
intensifies
- Global recession
- LNG Price differential between
Asia and America rapidly
diminish
- Flexible contracts