Regional LNG: $70b needed to meet Asia's rising demand for natural gas: Report

Nearly 70 billion US dollars in investments are required by 2020 to meet Asia's growing dependence on natural gas for its electricity needs, energy experts said Friday as reported by AFP.

Oil will remain a marginal player in the power generation sector because of its high price while coal will remain the most popular fuel in the region thanks to its abundance in China and India, they told at the seventh Asia Power conference in Singapore.

Pudjo Suwarno, vice president for gas marketing at Indonesia's PT Exspan Nusantara, said electricity demand in Asia should grow at an annual rate of 3.4 percent between 2000 and 2020, with China leading the pack at 4.7 percent.

Power plants fueled by natural gas are expected to supply 15 percent of Asia's total electricity demand by 2020, up from 12.3 percent in 2000, Suwarno said.

Between 2000 and 2020, he said investments totalling 25 billion dollars were needed for new infrastructure such as pipelines and liquefied natural gas (LNG) terminals to meet rising demand.

An additional 42 billion dollars is needed to build combined cycle gas turbine power plants with a capacity of 85 gigawatts to meet demand for the same period.

The investments exclude funding for the construction of new liquid natural gas tankers to transport the product across the region.

Suwarno said oil would become an increasingly unpopular fuel in Asia because of its high price, reflecting a global trend.

Data presented at the conference showed oil's share for power generation fell from 22 percent globally in 1971 to nine percent in 2000 and is projected to further decrease to six percent by 2020.

From 1971 to 2000, the share of natural gas in the market globally rose from 17 percent to 20 percent and is forecast to increase to 29 percent by 2020.

Coal remains the largest source of energy for power plants, but its share of 43 percent is expected to decline to 40 percent in 2020. Nuclear power's share should fall from 19 percent in 2000 to 13 percent.

Leonidas Drollas, deputy director and chief economist of the Britain-based Centre for Global Energy Studies, said that, at current prices, it was virtually impossible for oil to regain its lustre as a favoured fuel for power plants.

There are still 495 gigawatts of oil-fired power plants worldwide, 55 percent of which are in the industrialised nations and 38 percent in developing countries, he said.

"It then becomes a question of whether oil prices over the next 10 or more years will fall to low enough levels to boost the demand for fuel oil in the Far East beyond the modest levels expected," he told the conference.

For this to happen, delivered crude oil -- for example to Japan -- must drop to about 12 dollars a barrel for a sustained period so that if the de-sulphurisation cost of four dollars a barrel is added, the price can compete with the price of LNG.

"I'm sad to say this is unlikely to happen," he said.

Drollas blamed perennially high oil prices on members of the Organisation of Petroleum Exporting Countries (OPEC) cartel, which fix their prices were "preoccupied with the short term.

"Their key objective is to attain higher revenues in the short run at all costs," he said. (*)