Growing demand seen changing gas trade

April 14, 2005
With global demand for natural gas likely to grow by 2.2%/year during the next 2 decades, gas trade faces major changes, says Ron Billings, vice-president of LNG for ExxonMobil Gas & Power Marketing Co.

Rick Wilkinson
OGJ correspondent

PERTH, Apr. 14 -- With global demand for natural gas likely to grow by 2.2%/year during the next 2 decades, gas trade faces major changes, says Ron Billings, vice-president of LNG for ExxonMobil Gas & Power Marketing Co.

Speaking Apr. 13 at the Australian Petroleum Production and Exploration Association's annual conference in Perth, Billings said natural gas would become the preferred fuel for electric power generation.

He predicted that natural gas consumption will increase from the current level of 280 bcfd to about 500 bcfd, or one quarter of total world energy demand by 2030.

LNG
Billings said localized gas production will be important, but the major growth will come with LNG developments, where techological developments and economies of scale will lower the costs of production and delivery. This will extend the economic reach of remote supplies.

He said average growth of LNG over the next 25 years is likely to be as much as 7%/year. Markets will have far more liquidity than at present, and there will be a greater degree of price parity between Atlantic and Pacific Basin supplies.

Billings predicted that the Atlantic Basin will be the largest LNG market by 2020, with demand reaching some 250 million tonnes/year by that time. He added that the US in particular would become a target for LNG suppliers where previously it had been isolated from major LNG trade.

He said there will be much less reliance on long-term contracts as supplies and suppliers become more flexible. The overall globalization of world gas markets means that suppliers will be able to move gas on a short-term basis and the price risk of LNG developments will no longer depend on the credit of single buyers.