Cornering Asia's "sub-LNG" gas

David Knott
London
[email protected]

Premier Oil plc, London, has recently secured a ground-breaking deal to become a potential joint venture partner for Indian Oil Corp.

Steve Lowden, Premier's director-international, explains that, in line with a strategy to seek long-term projects in countries temporarily out of favor with oil industry, the company has been in discussion with India's state oil firms.

"India today is much the same as Pakistan was 8-9 years ago," said Lowden. "You need to be patient and willing to engage in talks about unusual project structures.

"India is our most challenging target area currently, particularly because of the lack of clear legislation about how state companies should work with joint venture partners."

Premier is looking to build a significant position in Assam state, said Lowden, where there is great interest for the company in gas prospects.

Progress expected

"We hope to bid with Indian Oil Corp. on projects there, and we may be able to participate in existing projects. We're expecting significant progress in the next 12 months."

The push in India fits in with Premier's other main strategy: pursuit of Asian gas projects. There the company has been building a portfolio over the last 8 years.

"We have a strong position in Asian gas," said Lowden, "which coincides with the region's major plays. There was a hint of luck in some of our early acquisitions, but our work here in the last 2 years has been highly focused."

Explaining the drive for Asian gas, Lowden said gas is prevalent throughout Asia. There are a number of world-class gas basins, but little oil.

"We have found a total 5 tcf of gas in the region," said Lowden, "of which 2 tcf is net to Premier. Most importantly, we have proved that we can create markets where the gas is stranded."

Immaturity

Key to Asia's gas prospects is the relative immaturity of the region's economies with respect to gas demand.

The energy use/gross domestic product ratio is low, so gas demand is expected to grow.

"The liquefied natural gas business is highly competitive," said Lowden, "and export driven. But we're into selling gas into local markets."

Hence Premier can target "sub-LNG" developments of finds with reserves of less than 5 tcf, said Lowden, either taking the gas to market by pipeline or bringing the market to the gas through conversion.

"We are currently looking at a number of strategic alliances with downstream gas players," said Lowden. "Being aligned with world-class downstream players would add value to our product.

"These could be electricity generation schemes, but the day has come when gas-to-gasoline technology is very exciting. Gas will become as important an energy source as gasoline is today."