Wednesday September 13, 2006

Asia faces US buying power for spot LNG

gulf-times.com :

Asia may lose out on costly spot and term LNG supplies next decade as it faces competition from increased Western import capacity, leaving a question mark over planned reliance on gas, a conference heard this week. China and India are among nations with surging gas demand that are trying to secure deals to import gas by tanker or pipeline, but sellers may hold out for those with greater buying power such as Japan and the US. The world's top energy consumer the US is expected to become the second largest liquefied natural gas (LNG) importer after Japan by 2010 and overtake Japan after 2015, according to consultancy FACTS Global Energy.

Supplies from top exporter Indonesia are declining while its domestic demand is growing, leaving a question mark over the renewal of contracts after 2010 to Japanese buyers and so a scramble for alternative supplies. "Japan has bought most of the LNG in Asia, leaving competition in China, India and South Korea behind, changing the LNG landscape," said Fereidun Fesharaki, CEO of FACTS.

The development of an emerging spot market will increase flexibility to buyers but may be of little comfort to Asia in an open market. "If you can send a cargo to the US then anyone else will have to pay a premium," said Cecile Jovene, senior consultant at FACTS. Oil prices often rally in winter when New York heating oil futures spike to attract fuel shipments from both east and west. To compete on gas Asian governments need to remove subsidies so consumers can get used to world prices, delegates said. "In the future it will be totally market driven," said A.K. Ray, executive director of business development at India's GAIL.

See also :

1. Indonesia to cut LNG supply to 6 million tons after 2010
2. Indonesia's LNG supremacy wanes as Chevron's fields run short
3. LNG at best an interim measure, alternatives must be looked into

(2006-09-13 12:31:25 SGT) [Energy] Permalink

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