Global Energy Review

LNG: Too much or too little?

A Report by Dr Paul McDonald
Consulting Editor, Oil and Energy Trends

Contents

List of Tables

Introduction

Liquefied natural gas is one of the most rapidly developing branches of the energy industry. Consumption has grown from 9 bn cfd in 1995 to nearly 20 bn cfd in 2005, and could rise to nearly 30 bn cfd by 2010. There are well-developed markets for LNG in Japan, South Korea, Taiwan, Western Europe and the United States. Several important new markets are opening up as well, including India, China, Great Britain and various parts of the US not already supplied by LNG.

The growth of LNG is being encouraged by a desire amongst many industrialized countries to substitute natural gas for oil and coal in order to reduce carbon emissions. Several countries, notably the US, also see LNG as substituting for oil imports from the Persian Gulf, thereby improving their energy security.

All this has encouraged gas producers and potential gas producers to draw up plans to export LNG. In some cases, such as Qatar, these plans involve an increase in existing LNG exports; other cases, including Yemen, Russia and Angola, involve becoming LNG exporters for the first time. One new exporter, Egypt, delivered its first LNG cargo at the beginning of 2005.

Demand for LNG will almost certainly increase considerably. What is less certain is how quickly demand will build-up. The financing of LNG developments requires the agreement of long term offtake agreements which, in turn, determine when export and import terminals are built. Such agreements can take years to negotiate, making it difficult to forecast the start-up of new LNG export schemes. A further complication is that some importers may be unable to guarantee that receiving terminals will be available by a certain date, owing to the difficulty of obtaining planning permission for new terminals. This issue particularly affects the US, but is a problem elsewhere.

These difficulties have slowed down a number of current discussions on LNG projects, leaving some exporters without sufficient offtake agreements to begin building new export facilities. In an attempt to encourage buyers to sign-up, some exporters have cut prices, while others have agreed to buy LNG on their own account and to find customers once the new export terminal is in operation.

All this suggests that it may be a buyer's market in LNG at the moment. This may well be true, but the situation could soon change, especially if world oil supplies remain tight over the next few years. Thus, though LNG growth might be restricted over the next five years or so, it is likely to increase rapidly early in the next decade.

Overview of World Trade in LNG

The world trade in LNG is expected to be just under 20 billion cubic feet a day (bn cfd) in 2005. For the last dozen or more years, the export of LNG has been dominated by three countries-Indonesia, Algeria and Malaysia-which together accounted for 52% of world trade in 2003 (see Table 1).

These countries, however, are being challenged by several newcomers, notably:

Several other countries are planning to become LNG exporters, including:

Consumption of LNG is concentrated in a few countries (see Table 2) and is dominated by Japan, South Korea, Spain and the US, which together accounted for 80% of world demand in 2003. These will be joined by new importers within the next few years, including:

Other countries plan to increase their imports, notably the US.

Table 1
LNG Exporting Countries, 2003
Country Exports
(bn cfd)
Indonesia 3.45
Algeria 2.71
Malaysia 2.26
Qatar 1.86
Trinidad & Tobago 1.15
Nigeria 1.14
Australia 1.02
Brunei 0.94
Oman 0.89
UAE 0.69
US 0.16
Libya 0.07
Total 16.33
NB: Totals rounded.
Figures apply to contract volumes only
Source: BP Statistical Review of World Energy 2004; Cedigaz
Table 2
LNG Importing Countries, 2003
Country Imports
(bn cfd)
Japan 7.71
South Korea 2.54
Spain 1.45
US 1.39
France 0.95
Taiwan 0.72
Italy 0.53
Turkey 0.48
Belgium 0.30
Portugal 0.08
Puerto Rico 0.07
Greece 0.05
Dominican Republic 0.03
Total 16.33
NB: Totals rounded.
Figures apply to contract volumes only
Source: BP Statistical Review of World Energy 2004; Cedigaz

LNG Sellers

There are 13 LNG-exporting countries at present. The 12 that are listed in Table 1 were joined in January 2005 by Egypt, which began exporting from a terminal at Damietta, on the Mediterranean. A second Egyptian LNG scheme is due to start in the third quarter of 2005 (see Table 3).

Indonesia is the largest exporter, followed by Algeria and Malaysia, which together account for just over half the world's export trade in LNG. Indonesia, however, is likely to lose its leading position over the next few years thanks to the decline of its older gas fields and the rise of new production elsewhere, notably Qatar, which has stated its aim of becoming the world's leading LNG supplier by around the turn of the decade.

The next addition to the LNG exporters' club looks like being Yemen, which has recently revived plans for an export terminal on the Gulf of Aden (see next section). Supply contracts have been provisionally agreed with South Korea and the US (see Table 4).

Given the importance of these supply agreements to the financing of new export terminals, the main indicator for the future of LNG exports is to be found not amongst the sellers of LNG but with their present and future customers, which are surveyed in the following section.

Hyper-links:
Table 3
Egypt: LNG Projects
Segas
Shareholders: Union Fenosa 40%, ENI 40%; Egyptian Natural Gas Holding Company (Egas) 10%; Egyptian General Petroleum Corporation (EGPC) 10%.
Terminal location: Damietta
No. of trains: 1 + 1 planned
Capacity: Train 1: 667 mn cfd (5 mn t/y)
Train 2: 667 mn cfd (5 mn t/y)
Start date: Train 1: 2005
Train 2: Not decided
Supply contracts:
Train 1: Union Fenosa: 0.32-0.40 bn cfd; BP: 0.15 bn cfd; Petronas (Malaysia) 0.10 bn cfd. Contracts run for varying periods.
Egyptian LNG
Shareholders: BG 35.5%; Petronas 35.5%; Egas 12.0%; EGPC 12.0%; Gaz de France 5.0%
Terminal location: Idku
No. of trains: 3
Capacity: Train 1: 0.48 bn cfd (3.6 mn t/y)
Train 2: 0.48 bn cfd (3.6 mn t/y)
Train 3: 0.48 bn cfd (3.6 mn t/y)
Start date: Train 1: 3Q 2005
Train 2: mid-2006
Train 3: Not decided
Supply contracts:
Train 1: Gaz de France 0.48 bn cfd for 20 years
Train 2: BG 0.48 bn cfd 2006-8 to US; thereafter to Italy.
Source: Company reports
Table 4
Yemen LNG: Project Details
Founded: January 1997
Shareholders: Total 42.9%; Yemen Gas 23.1%; Hunt Oil (US) 18.0%; SK Engineering & Construction (South Korea) 10.0%; Hyundai Industries (South Korea) 6.0%
Proven reserves: 10 trillion cf from Marib region of central Yemen, some 200 miles away.
No of trains: 2
Capacity: 894 mn cfd (6.7 mn t/y)
Terminal location: Balhaf, Gulf of Aden
Supply contracts * Kogas: 0.17-0.27 bn cfd from 2008 for 20 years.
Tractebel (Belgium):† 0.33 bn cfd from 2009 for 20 years.
Total Gas & Power: 0.27 bn cfd from 2009 for 20 years.
* Heads of agreement
† To be delivered to US
Source: Total; trade press.

LNG Buyers

Several countries are discussing major new supply contracts to begin over the next few years. Contracts normally run for about 20 years. The long period is necessary in order to cover the cost of both liquefaction terminals in the exporting countries, regasification terminals in the consuming countries and the dedicated vessels that carry the LNG. Pricing normally consists of a base-price with an escalator based on the price of competing fuels or other economic indicators. Different prices apply to different categories of shipments (e.g. base-load, top-up parcels, one-off spot deals). Prices quoted in the trade press tend to refer to base prices only.

There are various price negotiations under way at present. One of the key questions to be resolved is where the pricing power lies. Deals signed early in 2005 suggest that LNG is a buyers' market; but this may be about to change.

Buying Cheaply

South Korea's national gas company, Kogas, is discussing sales and purchase agreements with consortia from Malaysia, Russia and Yemen for the import of up to 0.7 bn cfd of LNG (see Table 5). Price formulae have been agreed that provide gas 35-40% cheaper than previous contracts signed by Kogas, according to officials of the Ministry of Commerce, Industry and Energy. The new deals are also reported to be around 10% cheaper than the prices paid by Japanese importers for comparable supply arrangements. The price offered by the Yemeni group is said to be particularly attractive to Kogas. All three deals are expected to be finalized in April, when they will be submitted to the Korean government for approval.

Total's willingness to offer LNG at a low price forms part of a calculated risk on the part of the French company to ensure the development of the Yemen LNG project. The notion of LNG exports from Yemen has been around for many years but the project has struggled to find buyers in the face of fierce competition from other Middle Eastern suppliers, such as Qatar and Oman. Recently, however, Total has signed heads of agreement with three companies for supplies starting in either 2008 or 2009 (see Table 4). As a result, it expects to be able to announce a final investment decision on the project by the middle of the year.

One of the customers is Total itself. Under this somewhat unusual arrangement, Total has said it will take up to 30% of the project's proposed output of 0.9 bn cfd. The aim of this is to provide security for the project's financiers in terms of offtake volumes. Project financing is normally contingent upon long term sales agreements covering the major part of the scheme's proposed output. Total is in effect taking this risk on its own books. As such, it could be taken as a sign of weakness on the part of the project's principal shareholder.

Are Sellers struggling?

Total is not the only company to take on the risk of agreeing to buy the output from its own project. Shell and BP have come to similar arrangements with projects of their own: Shell with Sakhalin in Russia and BP with its proposed Tangguh project in Indonesia.

Elsewhere, LNG sellers appear to be under growing pressure to cut prices in what looks like an oversupplied market. Egypt, for example, which has just opened the world's largest export train, plans to commission a second one later this year, while a third one is slated for 2006. LNG terminals are being developed on two separate sites: the Segas terminal at Damietta, in the Nile Delta, and a further one further west at Idku. The UK's BG Group has the lead role in the Idku project, whilst Spain's Union Fenosa and Italy's ENI are the majority shareholders in Damietta (see Table 3). Both of Egypt's LNG groups face considerable competition over the next few years from Qatar, Nigeria and Iran. Qatar in particular is planning a major expansion between now and 2010 (see Table 6).

Too much Gas?

All this seems to imply that the world's LNG markets will be amply supplied with gas until about the end of the decade. A different picture is beginning to emerge, however, towards 2010. While there are certainly several more projects on the drawing-board, it is also becoming evident that demand for LNG is starting to accelerate. Supplies could start becoming tight in some markets in under five years.

Growth in demand is not the only issue. Some export projects may be delayed for political reasons, such as BP's Tangguh scheme, or because there is not sufficient gas available for later phases of existing developments, as could turn out to be the case with Egypt's LNG. There could even be temporary shortages of LNG in exceptionally cold winters, caused by the inability of exporters to supply extra volumes of gas at short notice.

The main sources of new demand are China, India and the US, but several other countries are also seeking large supply volumes over the next few years, including the UK, which will shortly cease to be a net exporter of gas. Other potential new buyers are the Philippines, Mexico, Chile, New Zealand and parts of the Caribbean.

China presents the greatest market potential as it tries to satisfy its rapidly growing demand for energy and raw materials. Eight terminals have been agreed, which could allow China to import up to 4.5 bn cfd by 2010. More LNG facilities are likely to follow, given China's current difficulties over finding companies to back a long-distance import pipeline from Russia. China's first import terminal is due to open in 2006.

Despite a false start with its first LNG terminal at Dabhol, India is intent on importing LNG in large volumes. Imports began in January 2004 and amounted to 0.3 bn cfd in that year. India's difficulties in importing gas by pipeline from Bangladesh and the political problems of bringing gas from Iran by a pipeline crossing Pakistan make LNG the preferred option for gas imports. A second import terminal is due to open this year, though the original terminal at Dabhol remains closed. Indian LNG imports are forecast to reach 0.6 bn cfd in 2006. Petronet LNG, a venture composed of Indian oil and gas companies, estimates that India will be importing 2.0 bn cfd by 2010.

The US represents the other major new market. At present, it imports some 1.4 bn cfd of LNG through four terminals. There are plans to increase the number to eight by 2010 and to increase capacity at the existing terminals. The US Department of Energy forecasts LNG imports of nearly 5.6 bn cfd by 2010.

The UK could have sufficient LNG terminal capacity to import nearly 3.0 bn cfd by 2010 or shortly afterwards with Qatar a major supplier. Another European country planning to import large quantities by 2010 is Italy. At present, the country has just one import terminal in operation, the 0.3 bn cfd Panigaglia facility, operated by ENI. Another ten terminals are planned, though not all will be in operation in 2010. Italian LNG imports could nevertheless be in the region of 2.0 bn cfd by then.

Elsewhere, Mexico is planning to import LNG both on its own account and for re-export to the US. The Philippines has discussed the idea of building a 0.2 bn cfd import terminal, and New Zealand is exploring the idea of replacing its declining gas production with LNG from Australia. South Korea is likely to want an additional 0.4 bn cfd of LNG from 2010 onwards. Chile meanwhile has begun to consider LNG imports following last year's interruption in pipeline deliveries from Argentina. Several Caribbean islands are also studying the possibility of small scale LNG imports.

Sources of Supply

The take-up of LNG will depend on how much import capacity can be added. Some of the schemes outlined above may well not be ready on time. At the same time, however, some export schemes may not be ready either.

The most ambitious programme of any exporter is to be found in Qatar. Qatar is at present the world's fourth-largest exporter of LNG (see Table 1) but plans to become the leading player within a few years. Recently published plans suggest that the emirate could have some 10.4 bn cfd of capacity by 2010-11 (see Table 6). There are now reasons to believe that this timetable has slipped.

Qatar's problem is that it simply cannot find the contractors or raw materials to build its new capacity in time. The earliest that it can reach its planned capacity of 10.4 bn cfd looks like being 2012, and it could even be later than that. BP's Tangguh project in Indonesia, due on-stream in 2008, could slip back because of unresolved legal and political issues with Jakarta. It is not yet clear either if Yemen LNG will make its projected 2009 start-up. One project already put back beyond 2010 is the 0.5 bn cfd Greater Sunrise project which was to have been a joint development between Australia and East Timor, now shelved because of a dispute over revenue-sharing. Egypt will not be able to increase LNG exports as planned either unless new reserves of gas are found. There are strong competing demands for gas in the domestic market, particularly for power generation, and plans for exports by pipeline to the Levant and, eventually, to Europe.

Some new producers might make up some of the LNG supply shortfall from the producers mentioned above. These include Iran, Venezuela, Peru, Bolivia (probably via Peru), Equatorial Guinea and Angola. Iran plans to begin exporting by 2009. Venezuela plans exports at some time but may struggle to finance its schemes. Not all of the above will be on-stream before 2010. Russia plans LNG exports to the US from its giant Yamal development in Western Siberia, but it will probably settle initially for a pipeline to Western Europe. The net result of the efforts of future buyers and sellers is difficult to predict, but it does appear increasingly that growth in demand for LNG may start to outstrip potential levels of supply from 2010.

Hyper-links:
  • AMERICAS
  • ASIA
  • EUROPE
Table 5
Kogas: LNG deals currently under Negotiation
Supplier Shareholders Volume * Start date Duration Project status
(bn cfd) (years)
Malaysia LNG III Petronas 60%;
Shell 15%;
Nippon Oil 10%;
Sarawak State 10%;
Mitsubishi 5%.		 0.20-0.27 2008 20 Operating
Sakhalin Energy Shell 55%;
Mitsui 25%;
Mitsubishi 20%.		 0.20-0.27 2008 20 Due on-stream 2007
Yemen LNG Total 42.9%;
Yemen Gas 23.1%;
Hunt Oil 18.0%;
SK 10.0%;
Hyundai 6.0%.		 0.17-0.27 2008 20 Due on-stream late 2008
* Kogas will take up to 0.7 bn cfd from the three suppliers.
Source: Trade press.
Table 6
Qatar: LNG Terminals
Project Shareholders Capacity Start-up date
(bn cfd)
Qatargas I QP 65.0%; ExxonMobil 10.0%; Total 10.0%; Marubeni 7.5%; Mitsui 7.5% 1.29 1997
0.08 2005
Qatargas II QP 70%; ExxonMobil 30% 2.08 2007-8
Qatargas III QP 70%; ConocoPhillips 30% 1.00 2009-10
Qatargas IV To be announced 1.07* 2010†
Total Qatargas 5.52
RasGas I QP 63%; ExxonMobil 25%; Kogas 5%; Itochu 4%;LNG Japan 3% 0.88 1999
RasGas II QP 70%; ExxonMobil 30% 0.63 2005
0.63 2006
0.63 TBD
RasGas III QP 70%; ExxonMobil 30% 1.04 2010
1.04 2011
Total RasGas 4.85
Total Qatargas & RasGas 10.37
* maximum figure
† unlikely before 2012-see text
Source: QP; trade press
TBD: to be decided
QP: Qatar Petroleum

Principal Markets & Suppliers

Whilst there are many potential markets for LNG, demand growth will be concentrated in a few, notably:

OET ARCHIVE

'LNG buyers and sellers vie for supremacy' Focus Mar05

United States

The US imported 1.4 bn cfd of LNG in 2003, amounting to just over 2% of its total gas consumption. Around 87% of US gas consumption is accounted for by domestic production, whilst the remaining 11% is imported by pipeline from Canada.

US gas consumption is expected to grow strongly in response to rising domestic gas prices, a fall in liquefaction, transport and regasification costs, environmental pressures and a political desire to reduce imports of oil from the Persian Gulf. Domestic production, on the other hand is more or less static, around 53 bn cfd. Plans to bring in new supplies from Alaska and Arctic Canada are being delayed by environmental objections. LNG is therefore seen as vital to filling the supply gap over the next few years.

The rate at which LNG can be imported depends on the increase in the capacity of the country's receiving terminals. There are ambitious plans to add capacity (see Table 7), but many of these are also subject to environmental opposition.

Further terminals serving the US are planned in Canada and Mexico. Mexico also plans to import LNG on its own account. There is environmental opposition to the proposed terminals in both countries, and particular opposition in Mexico to the building of receiving terminals in Baja California dedicated to supplying the US market, given the strong opposition to terminals that exists over the border in California.

No new US terminals appear likely before 2008. After that, several should start to come on-stream, but nothing like the numbers given in Table 7. Forecast import levels for 2010 go up to nearly 7 bn cfd; but this figure looks unlikely, given the possibility of delays in approving new terminals. A range of 5-6 bn cfd looks feasible (see Table 8), with a possible expansion to 10 bn cfd by about 2015.

OET ARCHIVE

'US looks north (and south) as gas starts to run out' Focus Aug04

''US Energy Infrastructure fails to take the strain' Focus Sep03

'USA ponders Future with less oil' Focus Jan03

Table 7
US: Proposed LNG Terminals
Location Capacity
  (mn cfd)
Existing Terminals
Everett, Mass 1,035
Cove Point, Md 1,800
Elba Island, Ga 1,200
Lake Charles, La 1,700
Total 5,735*
Proposed Terminals
North-East
Fall River, Mass 400
Gloucester, Mass 400
Somerset, Mass 650
Providence, RI 500
Total 1,950
Mid-Atlantic
Crown Point, NJ 1,200
Total 1,200
Gulf of Mexico
Mobile Bay, Al 1,000
Cheniere, Al 1,000
Main Pass, Al 1,000
Hackberry, La 1,500
Port Pelican, La 1,000
Gulf Landing, La 1,000
El Paso (offshore) 500
Sabine, La 2,700
Sabine, La 1,000
Freepoint, Tx 1,500
Louisiana (offshore) 1,000
Corpus Christi, Tx 2,700
Corpus Christi, Tx 1,000
Gulf of Mexico (offshore) 1,000
Gulf of Mexico (offshore) 1,500
Brownsville, Tx 2,700
Ingleside, Tx 1,000
Total 23,100
West Coast
Long Beach, Ca 700
California (offshore) 1,500
S. California (offshore) 500
Total 2,700
Total US 28,950
* Proposed capacity. Current (May 05) capacity reported as 3.0 bn cfd.
Source: US Federal Energy Regulatory Commission; Company data; Oil & Gas Journal.
Table 8
US LNG, 2003-10
2003 (bn cfd)
Consumption 60.9
Production 53.2
Net Imports
Pipeline 6.3
LNG 1.4
Total 7.7
Share of Gas in Energy Balance: 24.7%
Source: BP Statistical Review of World Energy, 2004.

LNG Import Forecast

(bn cfd)
2003 1.4
2010 5.0-6.0

China

China plans to begin LNG imports in 2006 with the opening of a 400 mn cfd terminal in Canton province, which will be supplied initially from Australia. A 270 mn cfd extension is planned by 2008. A further six terminals are planned by 2010, giving China a total capacity of up to 4.5 bn cfd by then.

As in the US, it is by no means certain that China's planned capacity will come on-stream as planned. China's problem is the lack of infrastructure to transport the gas from the receiving terminals to consumers onshore. The use of gas from LNG is likely to be confined for several years to a few coastal cities in the Tianjin-Peking, Shandong, Shanghai, Fujian and Canton areas.

Some terminals may not be built to their planned capacity, either. Chinese imports in 2010 may therefore be at the bottom end of the planned range: i.e. between 3.0 and 3.5 bn cfd (see Table 9).

OET ARCHIVE

'China struggles to satisfy oil demand' Focus Feb03

Table 9
Chinese LNG, 2003-10
2003 (bn cfd)
Consumption 3.2
Production 3.2
Net Imports nil
Share of Gas in Energy Balance: 2.5%
Source: BP Statistical Review of World Energy, 2004.

LNG Import Forecast

(bn cfd)
2003 nil
2010 3.0-3.5

India

India began importing LNG in 2004, with imports of 300 mn cfd. India is close to several potential pipeline suppliers of gas, but there are political problems in arranging for gas to be delivered in this way. There have been several proposals to pipe gas from Iran and the Arabian peninsula to India, but all of these have encountered the objection that any such pipeline would have to cross Pakistan, which New Delhi believes might threaten to cut off supplies in the event of a further deterioration in relations between the two countries. The same objection has prevented the building of a pipeline between India and Turkmenistan. There have been proposals to build a pipeline from the Arabian peninsula directly to India under the sea, but this idea has been rejected as prohibitively expensive. Bangladesh, another potential supplier, appears to want to use its gas domestically.

India has two receiving terminals in operation and a third at Dabhol, near Bombay, built by Enron but closed following a dispute over the pricing of electricity from a power station designed to use the LNG. The operating terminals are at Dahej and Hazira in Gujarat in the west of India. Dahej opened in 2004, while nearby Hazira began operations in April 2005 when its first LNG cargo arrived from Australia's North West Shelf. If Dabhol could be reopened, India could be importing around 2.0 bn cfd by 2010. Failing that, it is unlikely to have import terminal capacity of more than 1.7 bn cfd (see Table 10).

OET ARCHIVE

'Bangladesh seeks more gas' Gas and Power Mar05

Table 10
Indian LNG, 2003-10
2003 (bn cfd)
Consumption 2.9
Production 2.9
Net Imports nil
Share of Gas in Energy Balance: 7.8%
Source: BP Statistical Review of World Energy, 2004.

LNG Import Forecast

(bn cfd)
2003 nil
2010 1.7-2.0

Other Asia

Asia's other importers of LNG are Japan, South Korea and Taiwan, none of which have any domestic gas production to speak of, and all of which rely on LNG for their entire gas imports. Japan produces about 270 mn cfd-equivalent to less than 5% of demand-of which some 3 mn cfd is liquefied and supplied to other parts of Japan by rail.

All three countries are negotiating for large volumes of LNG, but these are largely meant to replace gas supplied under contracts due to expire between now and 2010. Japan and Taiwan plan new terminal capacity, but imports look unlikely to increase by very much between now and 2010. South Korea has plans for a new terminal, but its construction depends on the ending of uncertainty over the future monopoly status of the state-owned importer Kogas. The Koreans have been conducting extensive negotiations with Yemen, Malaysia, Russia and Australia. Japan is considering LNG imports from Russia, but these look unlikely before 2010.

LNG imports look likely to be little changed between 2003 and 2010 for the three countries combined (see Table 11). One other Asian country considering importing LNG is the Philippines, though it is not certain whether it will have a terminal operating by 2010. New Zealand has also proposed to import LNG from Australia to counteract the decline in its own gas production.

OET ARCHIVE

'Japan seeks greater energy security' Focus Dec04

Table 11
Asia/Pacific LNG, 2003-10
LNG Imports, 2003 (bn cfd)
Japan 7.7
South Korea 2.5
Taiwan 0.7
Total 11.0
Source: BP Statistical Review of World Energy, 2004.

LNG Imports, 2010

(bn cfd)
Japan 7.7-8.0
South Korea 2.3-2.5
Taiwan 0.7-0.9
Total 10.8-11.4
NB: Totals rounded.

Other Asia/Pacific countries planning to import LNG are:

Europe

Europe imported 3.9 bn cfd of LNG in 2003. Several countries intend to increase imports and Great Britain plans to resume imports of LNG. One new terminal is under development on the Isle of Grain, east of London, and two more are proposed for Milford Haven in west Wales. It is not yet clear, though, what proportion of UK imports will be met by LNG and how much will come in via new pipelines from Norway and the Continent.

As in other parts of the world, LNG imports are being driven in part by programmes to substitute high-carbon fuels, like oil and coal, with natural gas. Italy has a particularly ambitious programme to build new capacity. Spain and France are also planning increases. It is not clear, however, how much capacity will be built given the possibility of new pipelines from Norway and Russia. There are also environmental and other objections to some new receiving-terminals, especially in Italy.

All these factors may delay some schemes beyond 2010. Between 2.0 and 3.0 bn cfd of new capacity is planned at present, of which 2.0-2.6 bn cfd may be fully in operation by 2010, giving Europe an import total of 5.9-6.5 bn cfd (see Table 12).

OET ARCHIVE

'Germany struggles with high gas prices' Gas and Power Jan05

'EU gas market liberalization threatened by pricing issue' Focus Nov04

'Liberalized UK gas market faces challenges from the Continent' Focus Aug03

'Europe combs World for more Gas' ' Focus Oct02

Table 12
Europe LNG, 2003-10
LNG Imports, 2003 (bn cfd)
Spain 1.5
France 1.0
Italy 0.5
Turkey 0.5
Belgium 0.3
Others 0.1
Total 3.9
NB: Totals rounded.
Source: BP Statistical Review of World Energy, 2004.

LNG Imports, 2010

(bn cfd)
Total (including Great Britain) 5.9-6.5

Other Areas

Other current LNG importers are Puerto Rico and the Dominican Republic. Another Caribbean country planning to import LNG is Jamaica, but it is unlikely to be doing so by 2010. Similar uncertainty surrounds the plans for Brazil to build a regasification terminal at Fortaleza, in the north-east of the country.

Gas consumption is growing rapidly in Latin America. Consuming countries have until recently relied on their neighbours to supply gas by pipeline, but Argentinian exports have recently been cut in order to prevent domestic shortages following a steep rise in consumption in Argentina. Bolivia is another important exporter by pipeline, but a large proportion of its future output may be exported as LNG (see below).

OET ARCHIVE

'Camisea development boosts Peru's gas use' Gas and Power Nov04

'Low gas prices lead to shortages in Argentina' Gas and Power May04

'Can Brazil find all the gas it needs?' Gas and Power Sep02

Outlook for LNG, 2003-2010

World LNG demand is expected to grow by 10.2-13.2 bn cfd between 2003 an 2010, to reach 26.5-29.5 bn cfd (see Table 13). This forecast is more pessimistic than many, and reflects concerns that some planned terminals may not be fully in operation by 2010. Further uncertainty arises from the development of competing pipelines (see above). The biggest gains are expected in the US, China and Europe.

OET ARCHIVE

'LNG buyers and sellers vie for supremacy' Focus Mar05

Table 13
World LNG Imports, 2003-10
Country/Region 2003 2010 Change
(bn cfd)
US 1.4 5.0-6.0 3.6-4.6
China nil 3.0-3.5 3.0-3.5
India nil 1.7-2.0 1.7-2.0
Other Asia 11.0 10.8-11.4 (0.2)-0.4
Europe 3.9 5.9-6.5 2.0-2.6
Others 0.1 0.1 unch
Total 16.3 26.5-29.5 10.2-13.2
NB: Totals rounded.
Source for 2003 figures: BP Statistical Review of World Energy, 2004.

Outlook for LNG Supply

There are many countries planning to begin LNG exports around 2010. At the same time, some existing suppliers are planning to increase production. There may not be sufficient demand to accommodate all of them, though demand is likely to go on growing after 2010, and may even accelerate.

Qatar has the most ambitious plans of all the existing suppliers. Export capacity is supposed to go up by around 6 bn cfd between 2006 and 2010 (see Table 6), but some slippage of this timetable appears inevitable (see above). Most other producers have plans to expand. In addition, there are several countries planning to export LNG by about the end of the decade. These include:

Gazprom announced in February 2005 that it intended to export up to 2 bn cfd of LNG from the Shtokman field in the Barents Sea to the US from 2011. This would be Russia's second LNG export scheme after the 640 mn cfd Sakhalin II development (see Table 14). The Shtokman development would have to contend with ice-bound seas, and the estimated costs of the development suggest that pipeline exports to Europe would be more economic.

Iran's ambitious LNG export plans may well be cut back, delayed, or even cancelled in order to supply the rapidly growing domestic market. Iran has ambitions to export 4.8 bn cfd of LNG plus plans for export pipelines to Oman, Kuwait, Pakistan and India. The LNG exports are supposed to come from the South Pars fields, but most, if not all of the fields' projected production for 2010 of 20 bn cfd may well be required for reinjection into Iran's oil fields in order to prevent a sharp decline in crude production.

Yemen seems at last to be ready to go ahead with its long-delayed LNG plans and should be exporting by 2010. Bolivia and Peru have still to agree a joint policy on exports. Bolivia will need Peru's cooperation in the form of a sea terminal in Peru. Venezuela has been unable to agree the structure of its Mariscal Sucre LNG scheme with its intended partners, Mitsubishi and Shell.

Equatorial Guinea and Angola are unlikely to be exporting in 2010, nor is Africa's newest applicant to join the LNG exporters' club, Mauritania. Woodside Petroleum announced in April 2005 that it was studying the idea of an export terminal serving the US and Europe, but Mauritania's proven reserves are not yet large enough to make this a realistic proposition by 2010.

Around 30 bn cfd of new export capacity is currently proposed between 2006 and 2010 (see Table 14), which is well above the forecast increase in demand to 2010 shown in Table 13. By no means will all of this be built by 2010. As has already been noted, Qatar's programme is already behind schedule. Other countries likely to delay the start-up of new units are Iran, Bolivia, the US, Venezuela, Australia/East Timor, Indonesia and Nigeria. Whilst many of the units mentioned in Table 14 may be built shortly after 2010, the extra capacity actually available by 2010 could be less than half that proposed. To this must be added some 4 bn cfd of capacity due to be added between 2003 and 2005.

This tends to imply that LNG will remain something of a buyers' market until later in the decade. If, though, the rate of receiving-terminal building accelerates after 2010, as predicted above, more and more export capacity will be required. Given a 4-5 year lead time for new projects, exporters will have to start making decisions on projects due on-stream between 2010 and 2015 from now onwards. Thus, if more schemes are not firmed-up soon, market sentiment could soon move in favour of sellers of LNG, despite the apparently modest growth in demand forecast in Table 13. The same thing will happen if the main consuming countries manage to find ways of speeding up the approval of new regasification terminals or the building of gas transmission and distribution systems. Either way, the LNG business is set to grow.

OET ARCHIVE

'Mauritania set to begin oil production' Looking Ahead Apr05

HYPER-LINKS

RUSSIA: www.gazprom.ru/eng
www.sakhalinenergy.com
IRAN: www.nigc.org
YEMEN: www.yemenlng.com
www.huntoil.com/yemen.asp
BOLIVIA: www.narconews.com/Issue34/article1093.html
www.mexidata.info/id80.html
PERU: www.mirror.perupetro.com.pe
VENEZUELA: www.pdvsa.com.ve
ANGOLA: www.sonangol.com
www.angola.org.uk/pdf/angola_factsheet.pdf
EQUITORIAL GUINEA: www.equatorialoil.com
www.afrol.com/articles/13448
MAURITANIA: www.woodside.com.au
Table 14
Proposed LNG Export Terminals, 2006-2010
Country Terminal Capacity
(mn cfd)
Europe
Norway Melkoye 550
Russia Sakhalin II 640
Middle East
Iran Pars, South Pars; Persian LNG 4,800
Oman Qalhat 440
Qatar Qatargas; RasGas 5,710
Yemen Balhaf 800
N & S America
Bolivia Peru 930
Peru Camisea 530
Trinidad & Tobago Atlantic LNG 1,390
US Valdez 1,870
Venezuela Mariscal Sucre 630
Asia/Pacific
Australia NW Shelf; Gorgon 1,890
Australia/East Timor Greater Sunrise 710
Brunei Lumut 530
Indonesia Bontang; Donggi; Tangguh 2,330
Africa
Algeria Arzew 530
Angola Soyo 1,070
Egypt Idku 480
Equatorial Guinea Bioko Island 450
Nigeria Nigeria LNG; Brass River LNG;
West Niger Delta; Floating LNG		 3,220
Total 29,500
NB: Capacity numbers approximate and liable to modification.
Source: US Energy Information Administration

Latest Developments

Yemen

OET ARCHIVE LINK: ‘Yemen faces uncertain gas future’, Gas & Power, Feb 10

Previous:

Australia

OET ARCHIVE LINK: ‘Australia plans big increase in LNG exports’, Gas & Power, Jan 10

Algeria

OET ARCHIVE LINK: ‘Algeria’s gas plans fall behind schedule’, Gas & Power, Dec 09

Australia

OET ARCHIVE LINK: ‘Queensland banks on coal-seam gas exports’, Gas & Power, July 09

Russia

OET ARCHIVE LINK: ‘Russia begins LNG exports’, Gas & Power, March 09

Pakistan

OET ARCHIVE LINK: ‘Pakistan examines new gas options’’, Gas & Power, Feb09

OET ARCHIVE LINK: ‘Asia looks for more gas’, Gas & Power, Dec08

OET ARCHIVE LINK: ‘Algeria switches away from Oil to Gas’, Gas & Power, Oct08

Coal-Measures boost Australian Gas Prospects

OET ARCHIVE LINK: ‘Coal-Measures boost Australian Gas Prospects’, Gas & Power, Sep08

Middle East

OET ARCHIVE LINK: ‘Middle Eastern Countries examine Nuclear Option’, Gas & Power, Aug08

Egypt

OET ARCHIVE LINK: ‘Syria faces Decline in Output’, Looking Ahead, Aug08

Nigeria

Nigerian oil workers postponed a strike after the government agreed to cut the high price of fuel sold in the country.  Attacks on oil installations continued, however, as militant groups continued their protests against the activities of foreign oil companies and the government.  Five foreign workers were kidnapped after an attack on an oil service vessel.  Pipelines belonging to Shell and ENI were also damaged.  A strike of offshore workers threatened to delay the commissioning of the 250,000 bpd Agbami field.  In an attempt to relieve the pressure on energy prices at home, the government said it wanted gas companies to supply cheap gas to the domestic market, which could mean less is available for LNG schemes.

Russia

Russia plans an extra train at its 950 mn cfd Sakhalin-II LNG terminal as part of a plan to increase gas production off Sakhalin. Gazprom has announced a 2014 start date for its 2.4 bn cfd Sakhalin-III project, which will supply gas to a pipeline to the Russian mainland via Vladivostok, where it may eventually build a further LNG terminal to export some of the gas.

OET ARCHIVE LINK: ‘Dubai and Qatar agree world’s shortest LNG route’, Gas & Power, May08

Argentina

Argentina plans to use a floating regasification terminal to import up to 285 mn cfd from June to August to meet peak winter demand, having failed to get Bolivia to increase its exports. The LNG price is put as high as $14 per mn BTU.

New Terminals

Four countries are due to add new export capacity during 2008, according to Cedigaz, as follows:

  (bn cfd)
Indonesia 0.50
Malaysia 0.05
Nigeria 0.55
Qatar 1.00

Nigeria

Nigeria LNG’s Train 6 was commissioned in January, raising output by 535 mn cfd to 2.9 bn cfd.

Thailand

Thailand is to build a 667 mn cfd receiving-terminal at Mab Ta Phud, for completion in 2011, in order to meet demand growth of 6% annually.

Angola

Angola has taken the final investment decision on its LNG export project, paving the way for start-up in 2012. The terminal will be located at Soyo and will have a capacity of 700 mn cfd. The US is expected to be the main market.

Germany

RWE plans to build Germany’s first LNG import terminal. The 500 mn cfd facility is to be built at Wilhelmshaven and is scheduled to open in 2010.

Nigeria

The government has hinted that future LNG export schemes will have to demonstrate their economic viability before being approved. It wants more gas to be used domestically, particularly in electricity generation. The country suffers from chronic power shortages.

Australia

OET ARCHIVE LINK: ‘Australia plans more production’, Gas and Power, Sep07

India

IOC has delayed plans for an import terminal at Ennore owing to problems in securing supply contracts. It may rely instead on pipeline gas produced in the Indian Ocean.

Morocco

The government has backed proposals for a 0.5 bn cfd LNG import terminal; for Tangiers or Jorf Lasfar. Completion is scheduled for 2013. A second phase could result in the doubling of capacity.

Pakistan

Sui Southern Gas has called for price bids for its 0.5 bn cfd Marshall receiving-terminal. Completion is due in 2010-11

Papua New Guinea

OET ARCHIVE LINK: ‘PNG turns to LNG’, Gas and Power, Aug07

India

The 425 mn cfd, 360-mile pipeline from Dahej to Dabhol is reported to have been completed, which will allow the 2.15 GW power station at Dabhol to switch from naphtha to gas supplied from the Dahej LNG terminal.

Pakistan

Pakistan is considering onshore and floating LNG receiving-terminals.  The floating terminal is meant as an interim measure whilst the onshore terminal is being built.  The 470 mn cfd onshore terminal is two years behind schedule, with completion now due in 2011.  No site has yet been agreed.

US

California’s Governor, Arnold Schwarzenegger, has rejected a proposal to build an offshore receiving-terminal, known as Cabrillo Port, following protests from many Hollywood actors

UK

The UK’s National Grid says it will be unable to provide the full amount of capacity that has been allocated to shippers using the two new LNG terminals at Milford Haven, owing to delays in constructing a pipeline connecting the terminals to the national transmission system. The terminals are due to open in late-2007.

Angola

State-owned Sonangol has taken over ExxonMobil’s 36.4% shareholding in the Angola LNG project following the US company’s decision not to proceed with the scheme.  Sonangol has since sold a 13.6% stake to ENI.  The other shareholders are Chevron (36.4%), BP and Total (13.6% each).  The project is expected to produce 667 mn cfd with first exports due in 2010.

Papua New Guinea

Following the failure of a scheme to export its gas by pipeline to Australia, PNG is considering exporting LNG instead.  Three schemes have been proposed, starting between 2011 and 2013, with an LNG output of 400-535 mn cfd.  No firm decision has been taken on any project.

Qatar

Rasgas II has officially commissioned its fifth LNG train, with a capacity of 630 mn cfd, serving mainly the European market.

USA/Mexico

Chevron has abandoned plans for a 1.4 bn cfd LNG receiving-terminal at Isla Coronado, offshore from Baja California in Mexico, which was to have supplied gas to both Mexico and the US.  Isla Coronado was to have received LNG from Chevron’s Gorgon LNG project in Australia, but most of Gorgon’s output has been sold to Japan instead.

Brazil

Brazil will begin importing LNG in July 2008, some nine months earlier than planned, using floating terminals, according to state company, Petrobras.

Equatorial Guinea

Equatorial Guinea is to study the idea of adding more trains to its LNG project.  Some of the gas needed to supply the additional trains might come from Cameroon and Nigeria.  The first train, with a capacity of 450 mn cfd, is due on-stream in mid-2007.

Indonesia

Indonesia will cut the proportion of the gas that it exports from 58% of production to 50% in an attempt to satisfy growing domestic demand.  The government says it wants to increase gas production from the current level of 7.5 bn cfd, but faces a faster than expected decline in its gas reserves.

Iran

Iran has signed service agreements with Shell and Repsol for the development of Phases 13 and 14 of South Pars.  The two phases are designed to produce together some 3.0 bn cfd of gas and 110,000 bpd of condensate.  Around 2.1 bn cfd will be exported as LNG.

Exports to Turkey have been resumed following a 70% cut in December.

Previous:

Iran

Iran has signed a contract with China National Offshore Oil Corporation (CNOOC) to develop the 80 trillion cf North Pars gasfield. The field will be developed in four stages of 1.2 bn cfd each, two of which will be for LNG.

USA

US LNG imports in 2006 were reported by import terminal as follows:

Terminal

Volume

 

(bn cfd)

Cove Point

1.2

Elba Island

1.2

Everett

1.0

Gulf Gateway

0.5

Lake Charles

2.1

Total

6.0

Source: Petroleum Review

Russia

Gazprom has taken full control over the Yuzhno-Tambeiskoye gasfield following a deal with the other shareholder Yamal LNG, a privately-owned Russian company. The move makes Gazprom the only gas producer on the Yamal peninsula, which contains an estimated 175 trillion cf of gas. It is proposed to supply LNG from Yamal to the US .

China

China is to build an inland LNG terminal in Shaanxi province with an initial capacity of 18 mn cfd to serve the local market, with completion due in 2008.

India

The Dabhol LNG terminal is due to open in 2009, according to GAIL. The 670 mn cfd terminal was begun by Enron, which abandoned the project in 2001.

Indonesia

Indonesia is to build a 240 mn cfd LNG import terminal at Padang in Sulawesi , using gas from the nearby Senoco-Toili fields.

Russia

Gazprom has postponed the start of the Shtokman gasfield by two years to 2013. The field is designed to produce LNG for export.

China

China 's first LNG import terminal was officially inaugurated on 28th June, 2006. The Dapeng terminal, at Shenzhen in Canton Province is designed to receive 500 mn cfd of LNG from Australia 's North-West Shelf.

India

The Indian government is planning to sell the former Dabhol LNG receiving-terminal. Development of the terminal ceased when Enron quit the project following a dispute over the pricing of electricity from a 2.2 GW power station associated with the terminal. It is hoped to complete the 333 mn cfd terminal in about 2009.

Russia

A major LNG project could be delayed by a decision by the Russian Ministry of Natural resources to object to part of the development on environmental grounds. The Ministry is unhappy with the routes of some pipelines, which it says could be affected by mudslides, causing possible leakage of gas or oil.

The project, known as Sakhalin II, is based on the Piltun-Astokhskoye field complex, which contains an estimated 1.1 bn bbl of oil and 18  trillion cf of gas. An LNG export terminal is due to be completed in 2008, with a capacity of 1.3 bn cfd.

Singapore

Singapore has announced that it will import LNG in order to diversify its sources of gas supply. All its gas at present comes from Malaysia or Indonesia. A receiving-terminal capable of handling 400 mn cfd is planned for 2012, after which it could be increased to 800 mn cfd, under present proposals.

Croatia

Croatia 's state-owned gas company, Plinacro, is to try and revive plans for an LNG receiving-terminal to be built at Krk on the Adriatic to supply Eastern Europe. An opening date of 2012 has been tentatively set for the 1 bn cfd plant.

Nigeria

Protestors have threatened violent attacks on an LNG export scheme known as OK LNG which is being developed by NNPC, Chevron, Shell and BG.

The OK plant is designed to export 1.3 bn cfd from 2010. The threats to OK LNG are likely to worry other LNG developers. Nigeria plans to increase its LNG export capacity from 2.3 bn cfd to 10.0 bn cfd by 2012, making it then the world's second-largest exporter, after Qatar.

USA

The Federal Energy Regulatory Commission (FERC) has approved the following LNG terminal projects:

Terminal

Capacity Approved

 

(bn cfd)

 

Cove Point , Md

0.8

(expansion to 1.8 bn cfd)

Creole Trail, La

3.3

(new)

Sabine Pass , La

1.4

(expansion to 4.0 bn cfd)

Port Arthur , Tx

1.5

(new)

Crown Landing, NJ

1.2

(new)

Indonesia

Indonesia has cut the number of LNG cargoes it had contracted to sell during 2006 from 450 to 371, owing to greater than expected decline in gas reserves, especially in East Kalimantan.

Venezuela

PDVSA and Petrobras have postponed a decision on developing the long-delayed Mariscal Sucre offshore LNG project until August.

Kuwait

Kuwait is considering the import of LNG to meet a projected shortfall in supplies caused by delays to projects to import gas by pipeline from Iraq, Iran and Qatar. Kuwait 's gas demand is expected to rise from 1.5 bn cfd to 2.0 bn cfd between 2006 and 2010.

Japan

Nippon Oil's Mizushima LNG receiving terminal began operating fully on 1st April. The terminal can receive tankers carrying up to 5.1 bn cf of LNG. The gas will be supplied to Chugoku Electric Power Company and to industrial and domestic users.

Chile

BG is to build Chile 's first LNG receiving-terminal, for completion in 2009.

Indonesia

Falling gas output may force Indonesia to cut LNG exports in 2006.

Nigeria

Chevron is pulling-out of the Brass LNG project, but will continue to supply gas to the terminal. Another LNG venture, Olokola LNG, has had its start-up postponed by a year to 2010.

OET ARCHIVE LINK: ‘Nigeria struggles to expand oil industry', Focus Feb06

Trinidad & Tobago

The fourth train at Atlantic LNG has opened with a capacity of 695 mn cfd.

Yemen

Work has begun in the long-delayed Yemen LNG project. Two trains are planned with a combined capacity of 895 mn cfd, with start-up slated for 2009.

USA

Woodside has revealed plans for an import terminal offshore from southern California, capable of handling up to 1.4 bn cfd.

India

The government is to allow LNG to be imported into India in foreign-flagged vessels, reversing an earlier ruling.

Shell is to try and sell part of its holding in the Hazira terminal which has only imported four cargoes since it opened in April 2005. Hazira is one of two LNG import terminals; the other is at Dahej.

Libya

BP is reported to be discussing the possibility of developing LNG in Libya .

Nigeria

Nigeria LNG has opened its fifth train at Bonny Island , raising capacity there to 2.3 bn cfd. A sixth train is due to be added in 2007, bringing capacity up to 2.9 bn cfd.

UK

Norsea Pipeline Ltd and ConocoPhillips are applying for planning permission for an import terminal next to their Teesside oil import terminal.

Calor Gas, Centrica and LNG Japan are applying to build an LNG terminal at Canvey Island , with a capacity of 0.5 bn cfd.

USA

El Paso has applied for permission to raise capacity at its Elba Island , Georgia terminal by 0.9 bn cfd to 2.1 bn cfd.

New Projects

The following projects are expected to come on-stream in 2006:

Name

Operator

Country

Capacity

 

 

 

(bn cfd)

Darwin

ConocoPhillips

Australia

0.4

Qalhat LNG

Qalhat LNG

Oman

0.5

Oman LNG

Oman LNG

Oman

0.1 (expansion)

Statoil's 0.5 bn cfd Snøhvit project in Norway , which was due on-stream in 2006, has had its start-up postponed to 1st December, 2007.

USA

The state of Alaska wants the proposed North Slope pipeline to provide a spur to Valdez , where an LNG terminal might be constructed.

Russia

Russia has signed its first deal to export LNG to South Korea . Kogas has agreed to buy 200 mn cfd over 20 years from Sakhalin II. LNG exports from the Shell/Mitsui/Mitsubishi Sakhalin II project are likely to be delayed by a year, to 2008. Gazprom has also agreed to join the consortium.

Australia

Woodside and its partners have agreed to expand their North West Shelf project by 36% to 2.1 bn cfd by adding a fifth train, although not all the additional gas appears to have been sold. The new production unit is due on-stream in late 2008.

USA

The Federal Energy Regulatory Commission (FERC) has approved Occidental Petroleum's proposal for an LNG import terminal near San Patricio in Texas. Oxy hopes to commission the 1 bn cfd terminal in 2008.

Two Australian companies, BHP Billiton and Woodside, are lobbying California 's state government for permission to build receiving terminals. BHP's proposal is for one offshore from Cabrillo Port, Ventura County, whilst Woodside wants to build a terminal off the coast at Malibu. The Australian proposals appear to have a better chance of success than a rival onshore scheme at Long Beach supported by ConocoPhillips and Mitsubishi, which is close to a major urban area.

Lined up against the three schemes are two across the border in Baja California, Mexico: one backed by Sempra Energy and Shell, the other by ChevronTexaco. These appear to have a better chance of coming to fruition than the three north of the border, where there is considerable local opposition to any import terminals.

USA

The Federal Energy Commission (FERC) has approved a 2.0 bn cfd LNG terminal at Golden Pass on the Gulf Coast and a further one of 0.4 bn cfd at Fall River , Massachusetts . ExxonMobil has not yet decided whether it will build the Golden Pass terminal or develop another site on the Gulf of Mexico . The Fall River project requires further approvals before it can proceed. Meanwhile, FERC has rejected plans to expand a terminal at Providence , Rhode Island , citing safety fears.

India

A 20 tcf find claimed in the Krishna Godavari Basin off Andhra Pradesh could mean lower than planned imports of LNG for India , according to the state's chief minister. The size of the find has not been confirmed, however.

Italy

OET ARCHIVE:

‘Italy makes slow progress on LNG imports', Gas & Power Jul05

Netherlands

ConocoPhillips and Essent are to conduct a feasibility study for an import terminal in the Netherlands , with Emshaven a possible site. Gasunie is also considering the possibility of a terminal there.

Asia

OET ARCHIVE:

‘Chinese gas market draws investors', Gas and Power, May05

Singapore

The Singaporean government is considering the idea of building an LNG import terminal for completion by 2010. At present, gas is supplied by pipelines from Malaysia and Indonesia. The gas is used mainly for power generation and accounts for 65% of Singapore's electricity production. The gas and electricity markets are to be deregulated to allow competition between suppliers. It is thought that LNG would provide further competition by diversifying Singapore's sources of supply.

South Korea

The government is to allow private companies to import LNG, thereby breaking the monopoly of the state company, Kogas. Consumers have complained that Kogas' prices were too high. The first private cargo is due in June 2005 and will be imported by the steel company, Posco.

Indonesia

New offshore production by Unocal is to be used to try and stem the decline of the Bontang LNG export terminal. The 4 bn cfd plant–the world's largest–has had difficulty in producing the 3.1 bn cfd needed to fulfil its contractual obligations. Unocal will increase its share of the project from 7% to 30% as a result. The US company's growing role in LNG was one of the factors that encouraged its recent takeover by ChevronTexaco.

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