Warren R. True
Chief Technology Editor—Pipelines/Gas Processing
DOHA, Mar. 23 -- Despite movement toward spot contracts for LNG cargos in recent years, Algeria's Minister of Energy and Mines Chakib Khelil Sunday defended the centrality of long-term contracts in LNG trade in a keynote address that opened LNG14 in Doha.
"Long-term contracts remain essential for stabilizing the market" and for financing new LNG projects, he said, acknowledging the minor, arbitrage role for spot market cargos between large markets.
Also, Ras Laffan Liquefied Natural Gas Co. Ltd. (RasGas) Tuesday dedicated its $1.3 billion Train 3, the largest in world at 4.7 million tonnes/year (tpy) capacity, in a ceremony in conjunction with the triennial conference.
Growth driver
Khelil also pointed out that, despite growth projections for US gas demand that are driving a near-frenzy of terminal proposals for North America, Asia's projected gas demand provides the main force behind the growth of LNG supply plans.
Citing figures from the International Energy Agency, he said Asian consumption is expected to triple to 623 billion cu m (bcm) by 2025, a rate of 4.5%/year. Japan and South Korea will consume more than 70% of LNG currently offered in world markets. With China and India expected to muscle their way into the market for natural gas in general and LNG in particular, Asia will establish itself as the premier market in the world for gas.
European demand is to grow at 2.9%/year for the next 8 years and should reach 763 bcm by 2025, up from 425 bcm in 2001, said Khelil, still citing IEA numbers. The US will reach 766 bcm by 2010 and 910 bcm by 2020, he said.
LNG, heretofore a small supplement to the world's gas supply stream, is becoming a means of "decompartmentalization of regional markets," with spot markets and cargo swaps increasingly in play to provide arbitrage between markets.
Khelil said the industry finds itself at a "crossroads between regionalization and globalization of natural gas markets. Although the share of inter-regional trade for natural gas remains weak at about 6%,. . .many new projects are transcontinental."
In another speech delivered to the opening day gathering, Qatar's Second Deputy Premier and Minister of Energy and Industry Abdullah bin Hamad al-Attiyah said that the country's investment in new LNG projects will reach $30 billion, including the cost of producing field development, plant construction, port expansion, as well as vessel and terminal construction.
Al-Attiyah said by 2010 Qatar's gas exports will reach 60 million tpy, up from 18 million tpy currently. And the minister called attention to the recent shipment of 7.5 tonnes of LNG to India under a 25-year contract, an addition to the 5 million tpy the country already ships to India under a contract that pays it $850 million/year.
Noting the country's activities not only in LNG export, but also in gas-to-liquids projects and the Dolphin gas pipeline south to the UAE, al-Attiyah said that Qatar relies on "our huge reserves, remarkable geographical location, [and] stable investment climate. . .to pursue viable projects that assist in achieving our objectives."
World's largest LNG train
At the Tuesday dedication of RasGas's Train 3, Qatar's Finance Minister and RasGas Chairman Yousef Hussein Kamal called it the largest LNG train in the world to date. Capacity of the new train is 4.7 million tpy, a 40% increase over capacity for the existing Trains 1 and 2 at the Ras Laffan Industrial City site, north of Doha.
The $1.3 billion cost of the train includes offshore as well as plant and onshore facilities. India's Petronet LNG Ltd. will take supplies from the new train at its Dahej LNG terminal as part of a 25-year contract signed in 1999.
Kamal said Train 3 "has earned the world record for the lowest capital cost per tonne of LNG production capacity which was previously held by Trains 1and 2."
Jerry J. Wolahan, RasGas managing director, also called attention to Trains 4 and 5, now under construction, that will supply 4.7 million tpy to Europe and to planned Trains 6 and 7 that will supply 7.8 million tpy to the US.
Train 4 will come on stream in 2005.
Contact Warren R. True at [email protected].