theSun | WEDNESDAY JUNE 10 2009
business
Asian LNG supply to surpass
demand by year-end
KUALA LUMPUR: Demand for lique-
fied natural gas (LNG) in Asia-Pacific has
dropped tremendously and is expected to
be at between 15 and 20 million tonnes
by year-end, an energy consultant said
yesterday.
Dr Fereidun Fesharaki, chairman/
chief executive officer of the US-based
FACTS Global Energy Group, said there
would be an excess supply, which is esti-
mated to be at between 50 and 60 million
tonnes by year-end.
He said for the first half of next year,
there would an oversupply of LNG as all
the trains to process the LNG would be
fully operational.
“At that time, I think the suppliers
will have to think of new ways to sell
their LNG including moving to markets
like US and Europe, or stop producing
it because the market in this part of the
world cannot take the volume,” he told
reporters on the sidelines of the 14th Asia
Oil & Gas Conference here yesterday.
Fesharaki said this in response to a
question on the LNG outlook this year as
more buyers deferred LNG contracts due
to the global economic crisis.
FACTS Global Energy Group, an
energy market consultant, services over
175 retainer clients worldwide and has
the expertise to undertake substantive
research studies and project evalua-
tions.
According to Bank of America-Mer-
rill Lynch reports, Asian LNG demand
growth
was now negative from seven per
cent year-on-year last year.
The drop was most pronounced in
Japan, South Korea and Taiwan, which
together made up 60 per cent of the
global LNG market.
Meanwhile, Petronas gas business
vice-president, Datuk Wan Zulkiflee
Wan Ariffin, said reducing LNG produc-
tion was among the options for oil and
gas producers in terms of flexibility in
dealing with the current market condi-
tions.
“It was an option (cutting LNG pro-
duction) because the market is so fluid
for the past few months.
“We will see if there is a need to cut
back. So far (what we do) is doing more
maintenance work,” he said.
Earlier, Wan Zulkiflee, who is one of
the panellists at the session on “Natural
Gas: Suppliers’ perspective”, said sellers
must be flexible when dealing with their
long-term customers, especially under
the current marketconditions.
“They should be accommodating as
much as possible. Besides that, produc-
ers have other options such as diverting
to other markets and lowering their
production,” he said.
Another panellist, ExxonMobil Up-
stream Ventures vice-president (east
region), Wayne A. Harms, concurred,
saying that a stronger customer-supplier
relationship would get through these
economic challenges.
“The suppliers who can work well
with customers will be the ones who
will be successful in the longer term,”
he said.
Harms added that Asia would be an
important market as it would be the
largest natural gas market in the world
by 2030, with China and India taking the
lead.
Currently, Japan is the largest LNG
importer in the world. — Bernama
11
Santos sure of
sales agreement
KUALA LUMPUR: Australia’s Santos Ltd is confident of
locking in a sales agreement for liquefied natural gas (LNG)
for its Gladstone Liquidfied Natural Gas project by year-
end. Petronas is a major partner in the project with a 40%
stake.
Santos is the third largest oil and gas producer in Aus-
tralia.
“Negotiations are going on very well. We’re making good
progress.
“We have to land gas sales agreement before end of this
year to maintain the pace of our project and I’m confident
we’ll be able to do that,” said its chief executive officer and
managing director, David Knox.
The first LNG production is expected in 2014, he told
reporters at the Annual Asia Oil and Gas Conference, here
yesterday.
A news report last year said Petronas agreed to pay
Santos US$2.51 billion (RM8.85 billion) for a 40% stake in its
LNG development at Gladstone in Queensland, Australia.
The report also said Petronas will make an initial cash
investment of US$2.01 billion (RM7 billion) to be followed by
a further payment of US$500 million (RM1.74 billion) when a
final investment decision is made on a second LNG process-
ing train at Gladstone.
He said Santos is delighted to be working with Petronas.
“Petronas brings a lot to the table, operating expertise
as the largest LNG plant in this part of the world is operated
by Petronas.
“It is a partner all the way to marketing.”
On whether it was in talks with any party to reduce its
stake in project, Knox said: “We are prepared to reduce our
equity by up to nine per cent as part of the gas sales agree-
ment.”
Santos currently has 60% interest in the project.
— Bernama