Oil Price Gains Seen Boosting Gas Projects in Asia (Update2)
By Stephen Wisenthal and Lim Le Min
Kuala Lumpur, May 30 (Bloomberg) -- Oil exporters' success in boosting the oil price will spur investment in the rival fuel natural gas in Asia, where projects worth at least $10 billion could boost output more than 6 percent by 2003, producers said.
Rising demand as Asian economic growth recovers; price gains and the environmental benefits of using gas to make electricity are prompting producers to invest in gas wells, pipelines and gas- fired power in the region.
``The gas industry in Asia, particularly Indonesia, is going to explode,'' said David Whitby, vice-president of corporate development at Gulf Indonesia Resources Ltd. ``What the high oil price does is speed up the desire of governments and companies to get into the gas industry.''
Gas and oil prices are linked in most of Asia, which holds about 7 percent of global gas reserves.
Exxon Mobil Corp., Royal Dutch/Shell Group and BP Amoco Plc., the world's top three oil companies, are among those investing in gas projects from Australia to Vietnam.
``Most countries in Asia have under-utilized natural gas resources, which could be used to replace crude oil,'' said Lance E. Johnson, vice president, Southeast Asia/Australia for ExxonMobil Production Co. at the Asian Oil & Gas conference in Kuala Lumpur.
Clean Fuel
Gas is attractive for power generation because gas-fired generators produce fewer toxic emissions than traditional coal and oil-fired plants.
``Environmental considerations will have an impact on the types of energy chosen,'' said Mark Moody-Stuart, chairman of Shell. ``Gas will be the principal beneficiary.''
Chevron, the second-largest U.S. oil company, Oil Search and Orogen Minerals Ltd., a resources investment company controlled by the Papua New Guinea government, have been working for more than three years to develop a 3,000 kilometer pipeline from the Papua New Guinea Highlands to Australia.
The pipeline is part of a $3.5 billion project to ship gas fields run by Chevron and Exxon Mobil Corp., the world's biggest oil company.
Together with two pipeline projects to ship gas to Singapore power stations from Indonesia, the Malampaya and PNG projects could boost gas supply in the region by almost 500 billion cubic feet a year, or 6 percent of Asia's output last year.
Liquid Assets
While the long construction times for big pipeline projects mean investment decisions are less affected by swings in price, the gain in oil is encouraging exploration and the production of liquefied natural gas, which allows the fuel to be transported without the need for a pipeline.
Malaysia LNG Tiga Sdn., 70 percent-owned by state oil company Petroliam Nasional Bhd., or Petronas, said today it signed a contract to sell 1.6 million metric tons of LNG a year for 20 years to Japan.
Tokyo Gas Ltd., Toho Gas Co. and Osaka Gas Co. will buy gas, beginning 2004, from Bintulu in the Malaysian state of Sarawak, where Tiga has two liquefaction plants and is building a third.
``Demand for natural gas in Asia is increasing,'' said Tajudin Ibrahim, Petronas' gas processing plant manager. The promise of good returns is (prompting companies) to invest in gas infrastructure and liquefaction plants.''
Indonesia
On Indonesia's part of New Guinea, state-owned energy company PT Pertamina is building its third LNG plant, a $1.5 billion, 6 million-ton-a-year facility to process gas from its Tangguh fields that could hold as much as 23.7 trillion cubic feet of gas.
Indonesia is the world's biggest exporter of LNG.
``The LNG trade will grow,'' said Moody-Stuart, ``and pipeline networks will expand across vast stretches of Asia.''
Gas is benefiting in Asia from the twin incentives of recovering economic growth and the switch from oil.
``Natural gas will definitely replace crude oil in the long term,'' said Mohamad Idris Mansor, senior vice president for Exploration and Production at Petronas.
Korea's power consumption in January reached almost 20 billion kilowatts per hour, the highest ever, as industrial use rose 16 percent on the country's economic recovery and households switched to electric heating from oil, the government said.
Power Surge
``With economic growth and an increase in electricity demand, there'll be good demand for natural gas in Asia,'' said Philip J. Dingle, chairman of Esso Companies in Malaysia.
Esso is developing the Malaysia's Angsi field, which will be able to produce up to 400 million cubic feet of gas a day after production begins in late 2001 or 2002. That would raise Esso Malaysia's gas output by about a quarter.
Asian producers also favor development of gas to use instead of oil, so they can export the oil for foreign currency.
Eni SpA, Europe's fourth-largest oil company, which last week gained a license to explore for gas in China's Qaidam basin, said it expects gas demand in the world's most populous nation to nearly triple in the next ten years to more than 60 billion cubic meters a year.
quote.bloomberg.com
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Malaysia's Petronas Inks 6 Billion Dollar Deal to Sell Gas to Japan
KUALA LUMPUR, May 30 (Deutsche Press-Agentur) - Malaysia's state oil firm, Petronas, on Tuesday secured a 20-year contract worth 6 billion dollars to supply liquefied natural gas to three major Japanese gas companies.
A Petronas subsidiary, Malaysia LNG Tiga Sdn Bhd (MLNG), signed the "confirmation of intent" deal in Kuala Lumpur to supply Tokyo Gas Ltd, Toho Gas Co Ltd and Osaka Gas Co Ltd with 1.6 million tonnes of gas annually beginning from 2004.
The three Japanese companies, which are among Japan's biggest gas companies and supply over 16 million households, are long-time buyers of gas from Petronas under existing contracts.
A Petronas statement said the deal is the fourth such deal secured by the Malaysian oil firm, with the other customers being companies from Japan and India.
Petronas President Mohamed Hassan Marican said Japanese firms remained the biggest buyers of Malaysian gas, ever since Petronas started exporting liquefied natural gas (LNG) in 1983.
He said the new contract was worth 6 billion dollars at today's market prices.
The gas would be shipped to Japan via tankers owned by Malaysian Shipping Corporation Bhd, which is also a Petronas subsidiary.
MLNG Tiga is owned 70 per cent by Petronas, with the remaining 30 per cent shared equally between Shell Gas B.V., Nippon Oil LNG B.V. (Netherlands), and the Sarawak state government.
Petronas is currently building its third LNG plant, next to the oil firm's existing two gas plants in Bintulu town in Sarawak state on Borneo island.
When the third plant is completed by the end of 2002, the Bintulu complex will be the world's single largest LNG complex, with a combined production capacity of about 23 million tonnes per annum. |
