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Royal Dutch Shell plc .com: Liquefied natural gas output to soar worldwide

MSNBC: Liquefied natural gas output to soar worldwide

The number of countries exporting liquefied natural gas will grow 30 per cent by the end of the decade, the US Department of Energy said on Tuesday.

Guy Caruso, head of the Energy Information Administration, the statistical arm of the DOE, said: “We do see the emergence of a robust LNG trade, leading to perhaps a real global gas market.”

By 2010, 17 countries will export LNG, with Norway, Russia, Equatorial Guinea and Peru joining the group.

In the US, LNG will become more important than piped gas from Canada, the US’s top foreign supplier, the EIA said.

The growth is being driven by demand and shrinking supply from fields whose gas lies close to Europe and the US and can therefore be transported by pipeline.

But the rapid rise of LNG is also proving to be a lifeline for the world’s biggest international energy companies, who are losing the battle to grow their oil production.

Liquefied natural gas will make up 19 per cent of the energy majors’ total production by 2020, up from only 6 per cent today, according to a report from Sanford Bernstein, a financial services company, this week.

The energy majors are investing billions of dollars in LNG projects in Africa, Australia, Qatar, Iran and Asia. As their oilfields age and oil-rich countries such as Saudi Arabia and Mexico keep their doors shut to foreign investment in their oilfields, international oil companies arebecoming international gas companies.

ExxonMobil, for example, last year managed to replace its used reserves only because it was able to book with the US Securities and Exchange Commission large gas reserves in Qatar, analysts said.

By 2020, the energy majors’ share of gas versus oil will rise from 37 per cent to 43 per cent, Bernstein estimates.

However, LNG has been prone to massive cost overruns, delays and challenges over environmental concerns.

Chevron, the US’s second-largest energy group, on Tuesday warned it faced growing costs at its massive Gorgon project in western Australia.

Neil Theobald, Chevron’s president of Gorgon marketing, said: “It’s fair to say we’re seeing very significant pressure.” He added that this was not “out of the ordinary for this sort of project”.

Chevron and its partners Exxon and Shell earlier this month suffered a setback when Western Australia’s Environmental Protection Authority said it would advise the state government to reject the project because of its environmental impact.

Mr Theobald said on Tuesday he expected the project to go ahead without delay.

Shell’s Sakhalin LNG project in eastern Siberia has suffered the greatest cost overrun, ballooning from a $10bn project to one costing $20bn. But the pressures are industry wide and several projects around the world have already seen delays.

For consuming countries LNG is critical, especially in Asia, which is relying on Australia’s gas to supplement the waning volumes from Indonesia, historically the major provider. Japan is set to double its imports from Australia in the next decade. In Europe, Algerian, Nigerian and Qatari LNG is seen as critical to reducing the region’s dependence on Russia, which is being seen as an increasingly untrustworthy supplier.

Additional reporting by Sheila McNulty in Houston

Copyright 2006 Financial Times


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