INTERVIEW: Huge Market For Australia LNG In The Americas
Friday August 26, 5:48 PM
By Ray Brindal
Of DOW JONES NEWSWIRES
sg.biz.yahoo.com
CANBERRA (Dow Jones)--Australia should be able to help satisfy some of the expected strong demand growth for liquefied natural gas in the U.S., Mexico and Chile, Ian Macfarlane, Australia's industry and resources minister, said Friday.
Figures supplied by the California-based Electric Power Research Institute to Macfarlane this week suggest annual demand for LNG in the U.S. will grow to between 60 million metric tons and 100 million tons a year, he said.
"We'll get a slice of that, add Californian to Mexican demand and top it up with Chile, you're talking about potential contracts of between 20 million and 30 million tons per annum on top of what we've already got," Macfarlane told Dow Jones Newswires in a telephone interview from San Francisco.
Macfarlane is scheduled later Friday to meet California's Lieutenant Governor Cruz Bustamante to discuss a slow-moving approvals process for BHP Billiton's (BHP) plan to import LNG into the U.S. West Coast via its Cabrillo Port venture.
The approvals process clock has stopped while a U.S. federal energy regulator assesses the "extraordinarily unlikely impact zone of the facility blowing up," the minister said.
Macfarlane intends inviting Bustamante to Australia so he can get first hand experience with LNG operations.
High Prices, Big Potential
U.S. gas consumers are paying "an extraordinary price compared to what you can land LNG here for," the minister noted.
Macfarlane is on a week long swing through the Americas, which started last Friday in Chile and continued this week in Mexico and the U.S., meeting ministers and industry representatives to promote Australia's LNG interests, and its safety and security as a supplier.
Australia is already a major global LNG supplier from its expanding North West Shelf project, and its Darwin LNG project, scheduled for completion early in 2006, will produce 3.5 million tons/year.
Australian LNG exports will grow to 12.4 million tons, valued at A$4.49 billion, this fiscal year from 10.7 million tons valued at A$3.22 billion in the year ended June 30, the government's Australian Bureau of Agricultural and Resource Economics has forecast.
In June, Abare published a study of proposed projects that combined would add a further 32.5 million tons of annual LNG output, and the list has expanded since.
Macfarlane said the architecture of what appears to be a massive Australian LNG export industry is now being put in place.
"The decisions are being made, the steel's being welded together and there'll be a lot more activity over the next 5 years as these other projects come on stream," he said.
"There's going to be a lot of gas coming out of Australia in the next 10 years," he said.
Doubts On Ability To Supply Chile Just Yet
However, he said he had to tell the Chileans that Australia mightn't be able to meet a relatively small 1.5 million metric tons a year contract just yet, expressions of interest for which he said close this weekend.
Output from the Darwin project is committed elsewhere as would be most of the N.W. Shelf's fifth LNG processing train, commissioning of which is expected to start from mid 2008.
But while Australian suppliers mightn't be able to meet Chile's supply needs to supply gas in 2008, they might be able to a year later, and possibly supply some spot cargoes in the interim, he said.
Macfarlane believes Australia's Woodside Petroleum Ltd. (WPL.AU) and Chevron Corp. (CVX) are probably interested in supplying Chile, even though Chevron's A$11 billion Gorgon project, which hasn't received the formal go-ahead, isn't expected to be producing until mid 2010.
Woodside, a one-sixth owner and operator of the North West Shelf project, hopes to fast track its 100%-owned A$4 billion-plus Pluto project into production by late 2010.
Royal Dutch/Shell Group (RD) is the largest shareholder in Woodside with a 34% stake and also is a partner in Gorgon and the NW Shelf.
Rob Millhouse, a spokesman for Woodside, said of the Chilean supply contract, "it's an opportunity we're evaluating."
"We're looking at a number of options to get gas out of Western Australia," he said in a brief interview.
Gorgon didn't respond to a telephone inquiry about Chile.
While in Mexico, Macfarlane joined roundtable discussion with industry and government representatives that covered Australian LNG, other mining opportunities and renewable fuels.
"Demand in Mexico for energy is very solid" and estimated to be growing 6% a year, he said.
Shell has committed to take up to 2.5 million metric tons a year from Gorgon for its Energia Costa Azul terminal in Baja California, starting 2010.
The terminal, now under construction, is owned by North American group Sempra Energy (SRE), and Shell has rights to 50% of the terminal's capacity. |
