Asian natural gas rebounding after economic crisis

Natural gas demand in Asia is on the rise, after being restrained for 2 years as a result of the economic crisis in the region, an industry conference was told here Monday. In an address at Gasex 2000, a natural gas conference being held in this Thai resort city, Mohamed Hassan Marican, CEO of Malaysian state oil corporation Petronas, noted that the strong growth projected in electricity consumption in the recovering economies of the Asia-Pacific region is a key reason for rising gas demand.

Sep 12th, 2000


PATTAYA, THAILAND´┐ŻNatural gas demand in Asia is on the rise, after being restrained for 2 years as a result of the economic crisis in the region, an industry conference was told here Monday.

In an address at Gasex 2000, a 3-day natural gas conference and exhibition being held in this Thai resort city, Mohamed Hassan Marican, CEO of Malaysian state oil corporation Petronas, noted that the strong growth projected in electricity consumption in the recovering economies of the Asia-Pacific region is a key reason for rising gas demand.

The Association of Southeast Asian Nations (ASEAN) region alone is expected to require an additional 70,000 MW of power generation capacity by the end of the decade, he said, pointing out that it was the power sector that drove the strong growth in Asian gas consumption during the past decade.

"The power sector is expected to continue strong expansion of the regional economies," he said, highlighting another wave of new gas demand in the region.

Given Asia's need for natural gas, especially in the new markets of India and China, Marican called on gas suppliers in the Middle East and East Asia to explore mutually beneficial trade or "cooperative competition" to optimize the potential that can be derived from the rebirth of Asia's gas market. He urged major gas producers in the two regions to seek win-win solutions for the benefit of both producers and consumers.

Another major issue facing gas producers, Marican said, is price. There is no international or regional benchmark price for gas, as there is for oil, he pointed out.

"We will need to address the affordability of the potential new markets in the region, outside of Japan, [South] Korea, and Taiwan, to pay the premium for gas as an alternative and cleaner fuel," he observed.

He noted the emergence of new suppliers amid increasing domestic gas consumption by existing regional suppliers. But the tariff for power is still controlled in most countries in the region, making development in regulatory framework a significant factor towards realizing independent gas pricing, Marican pointed out.

Thailand's efforts
Thai Industry Minister Suwat Liptapanlop disclosed that new gas-based projects are planned to encourage use of natural gas in the country, one of Asia's fastest-growing gas markets that was stifled by the 1997 monetary crisis.

He noted that more petrochemical plants are increasing their use of natural gas as a feedstock. Natural gas is also being increasingly used by the fertilizer and power generation industries in Thailand.

In a keynote address, he said the government had adopted a three-pronged approach in developing Thailand's natural gas industry.

First, the gas industry is being restructured to create an atmosphere for free competition, which should serve as an incentive for the industry to launch new projects. Second, the government wants to see the development of more gas fields and the extension of pipelines, including the gas-import lines from neighboring Myanmar.

The third approach to increasing gas use is to expand natural gas use in the industrial and transportation sectors.

"Thailand has been promoting the utilization of natural gas in vehicles by constructing the Bangkok Gas Ring Pipeline system to provide refueling stations in and around Bangkok," he said.

Prior to the economic crisis, he added, Thailand was set to become the region's fourth-largest natural gas market, with planned LNG import terminals and major gas-import pipelines from Indonesia.

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