Global LNG demand to rise to 230 MT by 2010: Shell

Royal Dutch/Shell Group said on Tuesday it expected global demand for liquefied natural gas (LNG) to jump by more than 50 percent from now until 2010, hitting 230 million tonnes per year at the end of the decade.

Peter De Wit, Shell International Gas Director for Asia, said gas consumption had grown considerably with LNG demand currently at roughly 150 million tons per year.

"The whole energy mix has changed dramatically since the early 1900s when coal and wood alone met the energy needs of our world. Today, gas and coal are almost on par," De Wit told delegates at the Asia Oil and Gas conference.

"In 2010, we expect global (LNG) demand to be as large as 230 million tons per annum, with over 25 importing countries."

De Wit said that by 2010, there would be major new projects onstream in Africa, the Middle East, Asia-Pacific and possibly South America, with demand growth in the United States, Mexico, Brazil, China and India.

BP group vice president for gas, power and renewables Anne Quinn told delegates that in order for the LNG sector to develop and for untapped gas reserves to be produced, there would need to be a mix of long- and short-term contracts.

"You need both types of contracts, one can't do without the other...Security of supply through long-term contracts is still important but having said that, there is a lot of room for contracts to be optimised on price and duration," Quinn said.

Asia is the biggest LNG market, with Japan, South Korea and Taiwan the biggest consumers. Indonesia, Malaysia and Brunei are among the top LNG producers.

LNG sellers prefer to tie customers in to long-term contracts of 20 years or more ensure returns on capital intensive gas projects. Buyers, however, argue that there is a glut in supply and demand is uncertain so competing sellers should be more flexible in their terms and make contracts five to 10 years.

Quinn said the co-existence of long and short-term contracts in Europe was proof that a balance could be achieved.

"There is spot trade in Zeebrugge, but also long-term contracts in Spain and France," she said.

A trading hub in Zeebrugge in Belgium allows buyers access to British gas after the 1998 opening of the UK/Belgium gas link.(*)