Energy Forum Summary Report Because of the capital intensity and the need to have regular flows of income to service debts, there must be a synchronisation or a high degree of synchronisation of supply and demand growth. Every time a supplier looks at building a new chain he wants to know where that demand is going to be and how it is going to establish the supply chain. The markets aren't liquid, it is not freely traded, it is set very much into long-term groups, and the number of industry players is relatively quite low and it is relatively quite low because of the capital intensity and the high barriers to entry for competition. That is a summary which hopefully sets in context my views of the oil, coal and LNG businesses. For the last couple of slides I am going to hone in on this right-hand diagram and show you the supply chain. The LNG supply chain has over the last five or 10 years become bigger, in the sense that the supply origins have developed bigger and bigger trains to try to reduce the cost of supply per ton. The average big train now produces 8 million tons a year of gas. You can see in the first box (slide 15) I have tried to put in US billions of dollars the scale of investment that we are talking about to bring 8 million tons of gas per annum to market for about 20 to 25 years. Slide 15
You will see that there are three major components, the upstream production, the liquefaction and the shipping, and then the downstream receiving terminal and the sale to market. In these capital figures here I have excluded the cost of capital for power stations. I have actually talked about supply to the country of import. Nevertheless, it costs between US$4 and US$7 billion to bring 8 million tons of LNG per annum to market.
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