That could mean better pricing options for big gas customers such as the Japanese and South Korean energy utilities, who have had to pay spot rates as high as $US20 per million metric British thermal units (mmbtu) in the wake of the 2011 Fukushima nuclear power plant disaster.
The cost of LNG is usually linked to a percentage of the world oil price, but the potential for North America to liquefy its abundant and cheap shale gas and ship it to Asia has raised the tantalising prospect of LNG linked to the much lower US Henry Hub gas prices.
For example, US front-runner Cheniere Energy, which aims to have its Sabine Pass LNG export terminal in Louisiana operating by the end of 2015, anticipates it can land gas in Asia for $9/mmbtu. But even with this price advantage, the industry view is that the US will not be a major exporter of LNG to Asia until the mid-2020s.
Asian LNG demand is expected to reach 400 million tonnes per annum (mtpa) by 2020, with Japan retaining its spot as the biggest importer, and China and India growing rapidly. A large part of Asia’s supply will continue to come from Qatar, which is now at maximum export capacity of 77 mtpa, and from Australia, which is likely to grow its capacity from 24 mtpa now to 80 mtpa by 2017 and as much as 130 mtpa by 2035, according to Resources Minister Martin Ferguson.
Malaysia, Brunei, Indonesia, the UAE and Oman are also important LNG suppliers to Asia.
It is the availability of new gas from Angola, Algeria, Mozambique and Kenya in Africa, plus Papua New Guinea and a host of export-oriented projects in Canada and the US, that brings a fresh element to the global gas market.
A wild card in the Asian supply scene is Russia, which last week announced that state-owned Gazprom would spend as much as $38 billion on developing a large gas field in eastern Siberia, with an associated 3200-km pipeline to a proposed LNG plant at Vladivostok on the east coast.
This project, which has Japan’s Itochu as a potential participant in the LNG plant, would open a new gas supply route to Asia by 2017 and add a 10 mtpa export capacity by 2020. Russia has a vast network of gas pipelines to serve European customers, but has only one LNG plant so far, the 10 mtpa Sakhalin-II project on Sakhalin island which has Shell and Japanese customers Mitsui and Mitsubishi as co-investors with Gazprom.
In Australia, the current production focus is the North West Shelf, where Woodside’s $15 billion Pluto project is the latest addition to a string of producing gas fields. It began exports in May this year, with Japanese companies Kansai Electric and Tokyo as launch customers and stakeholders.
Woodside will also make a final investment decision on its 12 mtpa Browse LNG project in the first half of 2013, while Chevron is pushing ahead with its massive Gorgon and Wheatstone developments despite escalating costs. Gorgon’s first LNG train is likely to be ready in late 2014. Shell has already committed to build its $12 billion 3.6 mtpa Prelude floating LNG project by 2016-17.
In the Northern Territory, ConocoPhillips has operated a 3.5 mtpa LNG plant in Darwin since 2006. Another LNG plant in Darwin, part of the $34 billion Ichthys project operated by Japanese company Inpex, is due to begin producing gas drawn from the Browse Basin in Western Australia in 2016.
But the supply equation has already begun to shift eastward, with three new LNG plants being built at Gladstone on the Queensland coast slated to ship gas from 2014-15.
Between them, the three projects have a range of Asian customers and shareholders, including China’s Sinopec and CNOOC, Japan’s Kansai Electric and Tokyo Gas, South Korea’s KoGas and Malaysia’s Petronas.
The first Queensland project likely to be ready is BG Group’s Curtis LNG in mid-2014, followed by the Origin Energy/ConocoPhillips Australia Pacific LNG in late 2014 and the Santos-led Gladstone LNG in late 2015. A fourth project, Arrow LNG, which is a joint venture between Shell and PetroChina, may be ready in 2017 if a final investment decision is taken this year or early in 2013.
Before any of the Australian east coast projects come onstream, the ExxonMobil-Oil Search venture is expected to begin first LNG exports from its 6.6 mtpa Port Moresby facility in 2014, with all output committed to buyers in China, Japan and Taiwan.
Outside of Australia and Papua New Guina, new global gas suppliers include Sonangol’s 5.2 mmtpa Angola LNG plant, which loaded its first tanker last month. In Algeria, state-run oil and gas company Sonatrach aims to have expanded LNG export plants at Skikda and Arzew ready in late 2013.
East Africa’s potential role as a new supplier rests on recent discoveries in Mozambique, Tanzania, Kenya and Uganda by oil and gas majors such as ExxonMobil, Norway’s Statoil, Italy’s Eni and UK-based BG Group. In June, US independent producer Anadarko Petroleum said that significant gas finds off the coast of Mozambique had the scale to support two LNG trains there. It said it would make a final investment decision in 2013, with a goal of first LNG sales in 2018.
In North America, up to 12 US and Canadian LNG projects are planned, but not all of them will eventuate in the face of political, environmental and financial constraints.Total North American LNG export volumes are unlikely to surpass 40 mtpa by 2020. Apart from Cheniere’s Sabine Pass project on the US Gulf Coast, Kitimat in Canada's British Columbia is a likely venue for LNG exports to Asia, with Apache, Shell and Petronas looking to establish plants there.
