Regional LNG: Woodside, Chevron to benefit from Asia?s high LNG demand

Woodside Petroleum Ltd. and Chevron Corp. may be best placed among LNG companies in Australia to benefit from surging demand for the fuel as Indonesia faces difficulty in meeting supply contracts, a consultant said, The Jakarta Post reported on Friday.

Woodside?s A$5 billion (US$3.5 billion) Pluto liquefied natural gas project and Chevron?s Gorgon venture are likely to be the next projects to start up in Australia, said Frank Harris, co-head of global LNG at Edinburgh-based Wood Mackenzie Consultants Ltd Inpex Corp and ConocoPhillips also may capitalize on increased demand for Australian LNG, he said.

Asian LNG demand may surge 40 percent to 137.8 million metric tons in 2010, and gain 43 percent to 197.4 million tons by 2015, Wood Mackenzie estimates.

Indonesia, the world?s biggest LNG exporter, said this week it won?t extend some contracts to sell the fuel after 2010 as the gas is needed within the country.

?Australia has to be the beneficiary of the situation in Indonesia,? Harris said in an interview in Sydney. ?Australia is perceived as a blue-chip supplier with huge reserves upside, while all its key competitors in the Pacific Basin supply business have got some sort of issue.?

Malaysia may in future have difficulty supplying high-quality gas to its LNG plant, while Qatar has a moratorium on additional gas exports and Iran looks increasingly uncertain as a future LNG supplier, Harris said.

Australia has about eight potential new LNG projects or expansions, in addition to an expansion underway at the Woodside operated North West Shelf venture, the country?s biggest LNG project.

ConocoPhilhips this quarter started up the nation?s second LNG project, in Darwin, northern Australia.

The government said this month it plans to work with the nation?s A$17 billion oil and gas industry to almost quadruple LNG exports to more than 50 million tons a year within a decade.

Australian LNG export revenue may surge 22 percent to A$6.1 billion in the year ending June 30, 2007, after a forecast 56 percent this year, the Australian Bureau of agricultural and Resource Economics said Feb. 28.

Woodside?s proposed Pluto LNG project may overtake the Chevron-led A$1.1 billion Gorgon project as the next Australian project to start up, Harris said. Both are scheduled to start up in 2010, though the project partners? approval for Gorgon may happen in 2007, making a start-up unlikely until 2011, he said.

Exxon Mobil Corp and Shell have stakes in Gorgon.

Inpex?s Ichthys project may be the third new project, possibly starting as early as 2012, and Shell?s commitment to drill about 12 wells within three years in an adjacent permit targeting discoveries suitable for LNG production creates ?potentially interesting possibilities? for a possible tie-up between the two companies in LNG, Harris said.

ConocoPhillips and Santos Ltd may find more gas this year at their planned Barossa well off northern Australia that may be combined with last year?s Caldita discovery for an LNG venture, Wood Mackenzie said. (*)