Woodside sees upward pressure on Asia-Pacific LNG prices
Monday, October 24 2005 - 03:16 PM WIB
Chief executive Don Voelte told an Asia-Pacific Economic Cooperation Forum in Sydney on Friday that as LNG becomes a more global commodity, increases in US gas prices are likely to significantly increase the upward pressure on Asia Pacific gas prices.
Voelte said an LNG supply overhang which prevailed in Asia Pacific region in the late 1990s and early part of the current decade has largely evaporated making it more difficult to shield Asian gas prices from increased oil prices and US gas prices.
"While gas prices may not become as "elastic" as oil on a global scale, and by that I mean we are unlikely to see a spike in gas prices in Asia due to a brief upset in the US such as the recent hurricanes in the Gulf of Mexico, I believe pricing through the APEC region will become more homogenous in coming years," he said.
Voelte noted natural gas consumption in the US, the world's biggest energy market, is forecast to grow to 30 trn cubic feet (tcf) by 2025 from 22 tcf currently.
He said Woodside estimates 7-10 tcf of imports will be required by 2025 to satisfy US demand, equating to more than 140 mln metric tons a year of additional LNG production.
"The ability of the US to supply its energy needs from domestic sources is diminishing rapidly, causing an increase in gas prices that has been as dramatic as the recent increase in oil prices, and increasing the importance of gas imports, particularly LNG," Voelte said.
He said limited regional supply choices and increasing energy consumption in the Asia Pacific region meant Australian LNG projects are a unique and highly attractive proposition for customers in Asia.
As well, he said, Australian exporters are seen as potential suppliers to a growing number of US East Coast and Gulf Coast buyers and import terminal developers.
"Faced with limited Atlantic basin and Middle East supply options themselves, these buyers are now seeking alternative sources that offer long term reliability and security," Voelte said.
"I believe Australian exporters are well placed to take advantages of these opportunities in both Asia and the US."(*)