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To: richardred who wrote (159111)	11/1/2011 2:03:34 PM
From: Dennis Roth	Respond to of 206085

US gas exports could converge global prices: IEA deputy chief Singapore (Platts)--31Oct2011/754 am EDT/1154 GMT platts.com The $10/Mcf premium for natural gas in Asian markets compared with the US could shrink if North American LNG exports become established, the deputy chief of the International Energy Agency said Monday in Singapore. "If it does happen and the US does become an exporter, that will help bring the global markets together," said Richard Jones, IEA's deputy executive director, during the Singapore International Energy Week. "But that's a big if. So we don't really know the answer, but the potential is certainly there for prices around the world to begin converging as the LNG trade grows." UAE oil minister Mohammed Bin Dhaen al-Hamli said during the same panel that LNG export terminals and pipelines linking otherwise isolated markets would put the gas world through "tremendous change in the coming years." In one emerging sign of the transformation, buyers and sellers are signing more short- and medium-term contracts, he said. "When it comes to gas, we're seeing that the more infrastructure we have in place, the more we're going to see a change in the pricing structure," Hamli said. "We are now seeing pipelines completed and running from Turkmenistan to China, and in the future perhaps Russia to China." Jones said the potential for the US gas market to break its isolation from world markets by exporting shale would come as a "huge surprise." "Just two or three years ago, everybody was talking about the US as the major import destination," he said. "Qatar facilities were built with the US in mind, and now all of a sudden the US is going to be not a customer but a competitor. It's hard to imagine, but that's the triumph of that technology." Michael Levi, director of the Council on Foreign Relations' energy security program, said developers of the export terminals will have a tough time balancing the market dynamics. "US exports only make sense when you have these big disparities in price across markets, but of course one of the big reasons we talk about US exports is because of their potential to collapse the difference in prices across markets," Levi said. "So it's a tricky one to sort through and it's a particularly tricky business proposition for someone trying to figure this out in the United States." Levi said the developers would have to recoup project costs quickly, otherwise they could suffer the same fate as US shale producers waiting out low prices. "If what they're doing catches on, they can't make money from it in the long term," he said. "That makes it very hard to predict where this will go." SHELL CALLS ASIA GAS MARKET KEY GROWTH AREA For now, high gas prices in Asia mean big money for suppliers. Shell CEO Peter Voser said during a separate press conference at the Singapore event that his company sees Asia as its key growth region, fueled by demand for LNG from western Canada and supply from floating LNG projects exploiting finds across the Pacific Rim. "Asia Pacific will slightly slow down in 2012, but it's clearly going to be the growth engine for the world for many years to come," he said. Voser said Shell is focused on four options for profiting from the global shale glut: gas-to-chemicals and gas-to-liquids production; LNG exports from Canada to China, Japan and South Korea; and LNG as transportation fuel such as a long-haul trucking project in the works from Alberta to Vancouver. On the production end, Voser highlighted the company's recent decision to finance the construction of a floating LNG ship weighing 600,000 mt and measuring 485 meters long and 70 meters wide. "It will allow us to develop smaller gas fields offshore, have a smaller footprint there and deliver the LNG to the hungry Asian markets," he said. --Meghan Gordon, meghan_gordon@platts.com