Rick Wilkinson
OGJ correspondent
PERTH, Apr. 14 -- LNG has reemerged as an important gas supply source in the Asia-Pacific region due to rapid demand growth in Japan, South Korea, and Taiwan. There are also new markets emerging in India, China, the Philippines, New Zealand, and North America.
Speaking at the Australian Petroleum Production and Exploration Association's annual conference in Perth, Allison Ball of the Australian Bureau of Agricultural and Resource Economics, said Asia-Pacific LNG imports are predicted to double by 2015, creating intense competition among existing suppliers to retain their markets. She predicted there would also be a key role for new projects. Australian LNG export capacity, for instance, has the potential to more than quadruple in size.
Demand for gas in the Asia-Pacific region has increased by a factor of four since 1980 due to the increased emphasis on environmental issues, the technology uptake of combined-cycle natural gas-fueled electric power plants, and commercialization of abundant gas reserves. Energy security and fuel diversification policies in the region have also been factors.
Ball said LNG shipments to Asia-Pacific are expected to reach 119 million tonnes by 2010 and rise to 150 million tonnes by 2015. The high side of the estimates could be 163 million tonnes by 2015, she added.
Japan will remain the largest recipient and one of the most important markets, with South Korea coming in second. But the fastest growing markets will be India and China, where imports are predicted to be 11 million tonnes/year and 18 million tonnes/year, respectively, by 2015.
Ball said that by 2010 about three quarters of LNG imports by Asia-Pacific countries will come from existing contracted supplies, leaving 21 million tonnes for which new supplies will have to be procured. By 2015, uncontracted LNG demand will rise to 76-89 million tonnes, which represents 51% of projected demand.
Japan will account for nearly one third of uncontracted LNG demand by 2015.
Ball said another factor of the future LNG trade would be the growing flexibility of contracts. Initial trade in the 1980s was based on long-term contracts, but there is a growing trend towards less rigid take-or-pay and destination clauses. There is also a tendency towards flexibility in fob pricing and a flexibility of delivery and timing.
Ball said that in 2003 Australia was the fourth largest LNG exporter in the Asia-Pacific region and seventh overall in the world trade. However, the country stands to increase that ranking if the proposed projects at Gorgon, Timor Sea, Browse basin, and other Carnarvon basin fields come to fruition.