Winter Outlook Consultation 07/08 Ed Blackmore Sempra Energy - PowerPoint PPT Presentation

Winter Outlook Consultation 07/08 Ed Blackmore Sempra Energy www.sempra.com

p/Therm 10 15 20 25 30 35 40 45 01/01/2007 15/01/2007 29/01/2007 12/02/2007 26/02/2007 SAP (red) v Daily volatility (blue) 12/03/2007 26/03/2007 UK Spot Prices YTD Strong 09/04/2007 23/04/2007 07/05/2007 21/05/2007 04/06/2007 18/06/2007 02/07/2007 16/07/2007 30/07/2007 13/08/2007 27/08/2007 10/09/2007 24/09/2007 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% % Vol

Does it matter? Does it matter? • Volatility sets the tone for the market – reduces liquidity – increases risk premium – increases bid/offer spread

Why so volatile? • CATS problems (a worry if occurs in winter) • Japanese reactor problems - LNG • Inconsistent continental production – plenty in April less in remainder of summer • Higher average demand in summer • Lack of gas on gas competition – marginal Therm generally Norwegian.

Source of gas Production by source 28th September 100% 90% 80% 70% Vesterled 60% Langeled 50% BBL Storage 40% UK Gas Production 30% 20% 10% 0%

p/Therm 30 32 34 36 38 40 42 44 46 48 50 02/01/07 15/01/07 26/01/07 08/02/07 21/02/07 06/03/07 19/03/07 Tough year for traders… 30/03/07 16/04/07 Winter 07 27/04/07 11/05/07 24/05/07 07/06/07 20/06/07 03/07/07 16/07/07 27/07/07 09/08/07 22/08/07 05/09/07 18/09/07