Eric Watkins
Oil Diplomacy Editor
While much of the oil and gas industry's attention was consumed by events in Libya last week, delegates at an energy summit in Indonesia heard extremely good news about natural gas and LNG.
"Since 1990, global gas consumption rose by 50%, while the Asia-Pacific's gas consumption tripled," said Mikkal Herberg at the 2011 Pacific Energy Summit in Jakarta. "Asia also remains the center of global LNG trade: the region accounts for nearly two thirds of global LNG demand."
Herberg added, "Japan and South Korea alone account for one half of the global LNG market, and growing LNG imports to China and India ensure that the Asia-Pacific will remain the key demand center for LNG."
Still, there are problems for gas even in Asia. Perhaps foremost, according to Herberg, gas use in Asia has been constrained by the region's wide geographic and maritime dispersion that make the "tyranny of distance" a key factor in Asia's gas use.
Yen for Gorgon
However, even that tyranny of distance may not pose such an obstacle any more.
Just days after the Pacific Energy Summit, the Japan Bank for International Cooperation—aiming to support Japanese businesses procuring LNG—announced plans to lend up to $102 million to Tokyo Gas Gorgon Pty. Ltd. (TGG), a unit of Tokyo Gas Co.
TGG will use the loan to participate in the development, in which it has a 1% stake, and will obtain 1.1 million tons of LNG through the project—about 10% of its annual supply of LNG. Additionally, Tokyo Gas will receive 150,000 tons of LNG annually as a stakeholder.
Meanwhile, in what one analyst described as a sign that "robust demand for resource shipments has begun to buoy the shipbuilding industry," Mitsubishi Heavy Industries Ltd. won a ¥20 billion order to build an LNG tanker for Nippon Yusen KK, its first such deal since yearend 2007.
Transport cost reduced
Under a 15-year contract with Tokyo Electric Power Co., Nippon Yusen will import about 1 million tons/year of LNG from Papua New Guinea and other places from 2014.
The new vessel will have a storage capacity of 145,400 cu m and feature an advanced steam turbine that can reduce fuel consumption by 15% compared with existing models.
That news fits in with Herberg's observation that, "The outlook for LNG supplies is booming with the development of a large number of new projects within and outside the region."
Although exports from traditional suppliers Indonesia, Malaysia, and Brunei have stabilized, Herberg noted that major new supplies have come from "Australia's northwest offshore region as well as from future new coal seam gas LNG projects in the Queensland region."
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