LNG demand to double by 2010: Report

Demand for liquefied natural gas may double by 2010, and rise a further 62 percent by 2015, because of increased consumption in the U.S. and sales to new markets such as Mexico, Chile and Singapore, Citigroup Inc. said as quoted by Bloomberg.

About 38 percent of the forecast growth to 264 million metric tons a year by 2010 is expected to occur in the U.S., Citigroup said in an Oct. 24 report. Consumption is ``surging'' in Europe, while China and India will contribute to the expected increase in demand, it said.

Royal Dutch Shell Plc, BP Plc, ConocoPhillips and Woodside Petroleum Ltd. are among companies increasing LNG production capacity to take advantage of rising demand from buyers such as power generators. Australia has the potential to become the largest producer of the fuel in the Asia-Pacific region, Citigroup said, overtaking Indonesia and Malaysia.

``The outlook for LNG looks to be stronger than it was a year ago,'' Sydney-based energy analyst Di Brookman wrote in the report. ``The U.S. energy situation has become tighter, LNG consumption in Europe is surging, China is consolidating, India is switching up a gear and new markets like Mexico, Chile, Singapore, Pakistan and perhaps New Zealand are looking increasingly like they will join the consumers club.''

About 97 million metric tons of LNG production capacity is under construction, which should increase global supply to 270 million tons a year by 2010, Citigroup said. Another 160 million tons a year may be required by 2015, it said. If all the potential output in Australia is included, such as Woodside's Pluto and Browse projects and Chevron Corp.'s Gorgon venture, that still leaves a shortfall of about 20 million tons a year, it said.

``Australia is positioned to capitalize on this growth, with a substantial un-contracted gas resource and a 20-year track record as an LNG producer,'' Brookman said in the report. ``If Australia moves decisively, it could become the largest producer of LNG in the Asia-Pacific region.''

Perth-based Woodside, Australia's second-biggest oil and gas producer, wants to start up its $3.8 billion Pluto LNG project by 2010 and its Browse LNG project in 2011-2014, Chief Executive Don Voelte said Oct. 21. The Woodside-operated North West Shelf venture is due to start up its fifth LNG unit in 2008, while ConocoPhillips is due to start up its Darwin plant in the first quarter next year. BHP Billiton also has a proposed LNG project in Western Australia.

About 19.9 million metric tons of LNG production capacity is scheduled to start up next year, which will help ease ``tightness'' in the LNG market exacerbated by production disruptions in Australia, Trinidad, Nigeria, Egypt and Qatar, Citigroup said. The market will tighten again in 2007 and 2008, creating a supply gap that leaves the way open for increased use of nuclear power, it said.(*)