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Shell Says World Needs More Gas Supply Capacity

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Shell Says World Needs More Gas Supply Capacity (Update1) 

By Fred Pals

July 2 (Bloomberg) — Royal Dutch Shell Plc, the biggest non-government producer of liquefied natural gas, called for an increase in gas production capacity to meet worldwide demand.

“Clearly, global demand for natural gas is racing ahead,” Linda Cook, executive director of gas and power at Shell, said at the World Petroleum Congress today in Madrid. “The question is whether supply can keep pace,” she added. Costs that have “skyrocketed” and a lack of access because of local government rules are keeping productivity down, she added.

Shell, Russia’s OAO Gazprom and their Japanese partners are expanding the Sakhalin-2 oil and gas project on Sakhalin island, off the eastern coast of the Russian mainland.

“When complete about year-end, it will have the capacity to produce 395,000 barrels of oil equivalent a day, including 9.6 million tons a year of LNG to be shipped to customers in Japan, Korea and North America,” Cook said.

Shell last month invited three companies to bid for the engineering and design of a floating liquefied natural gas facility in the Asia-Pacific region. Bids for the facility with an annual capacity of 3.5 million tons will be submitted around the end of the year and the first award is possible next year, The Hague-based Shell said June 26.

“We are considering the Prelude field as one of the fields to use the floating LNG facility,” Cook added at a separate press briefing today.

Shell is looking at other fields in the Asia-Pacific region for potential development, Cook said. The Prelude discovery is in the Browse Basin, about 400 kilometers (250 miles) off the Australian coast.

To contact the reporter on this story: Fred Pals in Amsterdam at[email protected]

Last Updated: July 2, 2008 05:20 EDT

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