13 June 2014
When Tony Abbott works the boardrooms of Houston this week there will be three letters on everyone’s lips – LNG.
And the biggest project occupying the minds of liquefied natural gas industry figures is the Panama Canal expansion.
Costing $A5.6 billion, the wider and deeper channels and locks of one of the world’s most famous waterways will for the first time allow massive Post-Panamax ships to make their way from North America to the booming markets of Asia.
It is expected to almost double the cargo moved via the canal over a decade.
On board will be American LNG competing against the Australian product.
This week, as the Australian prime minister visited Canada and the US, the Panama Canal Authority confirmed that despite union disputes and other troubles the expansion would be completed in January 2016.
A number of US ports, including Houston and Miami are being revamped at a cost of billions of dollars to take advantage of the canal.
Resources analysts believe that once the widened canal opens, LNG trade and pricing dynamics will start to shift.
But whether prices dip, stabilise or rise remains to be seen.
The shifting dynamics come as Australia aims to go from the fourth to the world’s largest LNG exporter by 2020.
Former Labor government minister and now opposition frontbencher Gary Gray said recently that Australian exporters will face stiff competition from the booming North American LNG industry.
He noted Canada was considering 13 LNG export proposals and North America as a whole had more than 40 proposals totalling about 250 million tonnes a year of capacity.
The use of the expanded Panama Canal, he says, could cut the cost of shipping LNG from North America by a quarter and put the US in third place behind Australia and Qatar in terms of exports.
However very few final investment decisions have been made in the US and development has been slow so far.
One veteran US oil and gas industry figure, who declined to be named, told AAP in Washington DC that LNG is a ‘global game-changer’ in many respects.
There are not only economic benefits of using natural gas domestically and exporting LNG.
It could also have geopolitical and environmental benefits.
A recent report by a US House of Representatives committee found that by exporting LNG, the US could supplant the influence of other exporters like Russia and Iran while strengthening ties with allies such as Australia and trading partners around the world.
As the US continues its pivot to the Asia-Pacific, it could also help developing countries by providing a much-needed source of affordable energy, and deliver environmental benefits through clean-burning natural gas.
However the Australian industry is confident of its long-term future.
Australia has three operating LNG developments – the North West Shelf, Darwin LNG and Pluto – and seven large projects under construction totalling $200 billion.
Four draw from gas fields off the north coast of Western Australia (Gorgon, Prelude, Wheatstone and Ichthys) and three are in Queensland (Queensland Curtis LNG, Gladstone LNG and Australia Pacific LNG).
In 2012/13, Australia shipped 23.9 million tonnes of LNG cargoes, earning $13.7 billion in export revenue, mostly to Japan, China and South Korea.
Taiwan is also a customer and India is an important emerging market.
One Asian country will oversee an expected demand for gas almost doubling between now and 2019.
They are the five letters on everyone’s lips – China.
Courtesy of Sky News
13 June 2014