'The world now knows what our deal is, what it takes to partner with us' Phil M. Spring 2011. He was referring to EWC terms.
EWC SCHEME:
EWC agreed to provide the CAPEX/OPEX for 14.5% royalty of LNG sales. No up- or midstream ownership.
LT sales at $15/Mcf, EWC gross is $2.175/Mcf. IOC and partners split $12.875/Mcf and keep $1.54/Mcf condensates revenue.
$12.875 + $1.54 = $14.414/Mcf. IOC/partner gross
EWC ROI roughly 30% (assuming CAPEX/OPEX at $1.67/Mcf w/o condensates subsidy)
GENERIC GULF LNG SCHEME:
CAPEX/OPEX for Gulf LNG per recent IOC slides is $1.67/Mcf. IOC and partners split $13.33/Mcf LNG revenues AND the $1.54/Mcf condenstes revenue.
$13.33 + $1.54 = $14.87/Mcf IOC/Partner gross
EWC scheme was a sweetheart option for Gulf LNG and it set the bidder bar high. IOC kept condensates and all upstream and great LNG %.
A SM won't compete $ for $ with what EWC offered but they WILL have to be competetive.
Sample bid: $3/Mcf + CAPEX/OPEX of $1.67 - Condensates revenue $1.54 = $3.13/Mcf.
Will JKM or PTT or an NOC be shy about a $3/Mcf bid? Will a SM be shy? They shouldn't.
Bid mindset isn't how cheap can we buy this resource but how high do we need to bid to win.
That condensate subsidy is going to make all involved a ton of $$.