Australia claims US prefers Australia as LNG supplier

The United States has indicated Australia will be its preferred supplier of LNG because of its political and economic stability, Reuters reported Australia's Department of Industry, Tourism and Resources as saying on Tuesday.

The U.S. Department of Energy has predicted domestic natural gas demand will jump to 35 trillion cubic feet (Tcf) from 22 Tcf by 2025, spurring the country to build new LNG terminals in addition to four plants already in service. Australian Prime Minister John Howard will lobby California Governor Arnold Schwarzenegger on Wednesday to back a BHP Billiton Ltd plan for an offshore terminal to supply super-cooled, natural gas to California.

Howard said the project that could be worth US$10.8 billion to the Australian economy, but the plan has raised questions as to where BHP Billiton would source gas from of it were successful.

"From the American perspective it's been indicated to us that because of the sensitivity of energy to them they would look to Australia," John Ryan, deputy secretary of the Department of Industry, Tourism and Resources, told a parliamentary committee.

"BHP have indicated Australia would be a preferred source for gas. There's a lot of hurdles to go yet."

Australia's LNG exports have traditionally headed largely for Japan, although in August 2002 it signed a A$25 billion agreement with China to supply Guangdong province in one of the biggest export deals in Australia's history.

"What we can clearly see into the future is the West Coast demand for gas is going to have a significant influence on the whole Asia Pacific region in terms of gas suppliers," Ryan said.

"People look at it as very lucrative. Between the West Coast of the United States and China being the two dominant new markets, I think a lot of Australian gas is going to get sold."

Industry and Resources Minister Ian Macfarlane has said Australia, which is jostling with neighbouring Indonesia and Russia's Far Eastern island of Sakhalin for global market share, has between 130 Tcf and 200 Tcf of natural gas reserves.

Australian gas resources that could supply the United States are the A$11 billion Gorgon project, operated by ChevronTexaco offshore north west Australia, and the $4.9 billion Greater Sunrise project in the Timor Sea, operated by Woodside Petroleum Ltd . (*)