shareholdersunite.com

Opportunities in smallcaps

shareholdersunite.com header image 2

LNG demand from China and India set to explode

December 10th, 2009 · 7 Comments

This really is a must read. 7-folding by 2025..

China, India LNG Imports May Rise Sevenfold, Santos CEO Says
By James Paton

Dec. 9 (Bloomberg) — Demand for liquefied natural gas in China and India may surge more than sevenfold by 2025 as the nations boost their use of cleaner-burning fuels, said the chief executive officer of Santos Ltd.

Consumption of gas chilled to liquid form in Asia’s two fastest-growing major economies may increase to 75 million tons a year in 2025 compared with 10 million tons a year currently, Santos’s David Knox said in an investor briefing today.

“Those are very, very significant growth rates,” Knox said. The Adelaide-based company expects a “considerable and sustained rise in LNG demand,” he said.

Australia’s third-largest oil and gas producer is among companies planning plants in the country aimed at tapping Asian demand for less-polluting alternatives to coal and oil. Santos is a partner in the $15 billion Exxon Mobil Corp.-led LNG project approved yesterday in Papua New Guinea.

Knox cited Chevron Corp.’s preliminary agreement to supply LNG from its Wheatstone project in Australia to Tokyo Electric Power Co. as evidence of the outlook for Asian demand. The Australian government estimates the deal may be worth A$90 billion ($81 billion.)

“Wheatstone is another example of the long-term commitment that buyers are prepared to make in these markets.”

Construction of the Papua New Guinea venture will begin next year after the partners complete agreements with customers and lenders, Exxon, the largest U.S. oil company, said yesterday.

Talks Until 4 a.m.

Final negotiations with Papua New Guinea landowners, who will hold a 2.8 percent stake in the project, continued until 4 a.m. yesterday, Knox said. The venture partners and the government signed an agreement to proceed at a 12 p.m. ceremony in Port Moresby. The Papua New Guinea government will have 16.6 percent of the venture. Exxon will hold a 33 percent stake, Santos 13.5 percent and Oil Search Ltd. 29 percent.

LNG sales from the project will probably exceed $100 billion over two decades, Tri-Zen International Ltd. consultant Tony Regan said yesterday in an e-mailed response to questions. The companies haven’t given an estimate.

Santos already produces the fuel with ConocoPhillips in Darwin. The company has formed a floating LNG venture with GDF Suez SA to develop fields in the Bonaparte Basin off Australia’s northern coast and has an LNG project in the state of Queensland with Malaysia’s Petroliam Nasional Bhd.

The Queensland venture, one of five seeking to convert gas extracted from coal seams for export to Asia, is scheduled to reach a final investment decision in the middle of 2010. The first processing unit will have a capacity to produce 3.6 million tons of LNG a year, Santos said in the presentation. The company said it plans to start a second unit a year after the first to bring production capacity to 7.2 million tons of LNG a year.

A Clearer Picture

The company remains in talks with potential customers in Asia to deliver gas and sell equity in the project, Knox said. Santos has said it may sell as much as 9 percent of the Gladstone LNG project as part of a gas-supply transaction.

Six months ago, potential Asian buyers were uncertain about the economy, Rick Wilkinson, president of the Queensland LNG venture, told investors today. “The Japanese were worried.” Wilkinson said. “The Asian players just didn’t have the modeling or the authority to negotiate long term until they had a clearer picture,” he said in the briefing. “I think that has happened now.”

Government efforts to curb carbon pollution and an increase in the role of nuclear power and renewable energy technologies may alter LNG forecasts, Knox said. “I suspect nuclear will have its day,” he said. “At the same time, I think gas will increase its penetration.”

Tags: IOC · Natural Gas

7 responses so far ↓

  • 1 bob // Dec 10, 2009 at 4:07 am

    crazy demand numbers
    working on supply

  • 2 Harold Chamberlin // Dec 10, 2009 at 4:08 am

    Great way to start a birthday… thanks stp . H

  • 3 Roger // Dec 10, 2009 at 2:47 pm

    Happy birthday Harold!

    Maybe we strike commercial oil on my birthday? ( Jan 8).

    LNG plant approval!!!

  • 4 Darcy Patten // Dec 10, 2009 at 5:48 pm

    Yes, Happy B-Day Harold! The LNG plant approval is great gift for you and all the longs!

  • 5 admin // Dec 10, 2009 at 7:01 pm

    Happy birthday Harold! How about that for a birthday present..

  • 6 Does China need LNG (Liquid Natural Gas)? — shareholdersunite.com // Feb 10, 2010 at 10:00 pm

    […] LNG imports from China and India set to seven-fold […]

  • 7 Will InterOil strike deals for liquids stripping and an LNG facility? — shareholdersunite.com // Mar 10, 2010 at 6:50 am

    […] LNG imports from China and India are set to seven-fold. […]