good time for gas

LNG bulls stampede

Wednesday, 21 September 2011

ANALYSTS are becoming increasingly bullish about LNG demand, with Japan importing record quantities to replace nuclear power and a big jump in Chinese purchases fuelling sentiments.



Courtesy of Woodside Petroleum

Bloomberg said the demand could lead to a 71% increase in prices from 2010 to $20 per million British Thermal units this winter, reducing global spare production capacity by about 50% this year.

While analysts had been wary about LNG demand, the March 11 tsunami that destroyed Japan�s Fukushima Daiichi power plant presented LNG producers with what Australian Energy and Resources Minister Martin Ferguson described as a �once in a lifetime� opportunity.

Since the disaster, all but 11 of Japan�s 54 nuclear reactors have remained offline and the government said no new plants would be built and atomic power would eventually be phased out, The Australian reported.

Senior Woodside and Santos executives have suggested that Japan could increase its LNG imports by up to 20 million tonnes per annum and that a large part of this could be met by the new supply from Australia.

The Australian quoted Allens Arthur Robinson Japanese chief Tim Lester as saying that while the capital costs of LNG projects were high, the nuclear disaster had led to them being readily sought after.

This has also provided further support to North American gas producers considering gas exports to Asia.

Bloomberg said 60% of the 19 analyst forecasts it compiled earlier this year were bullish on US gas, up from just 29% a month before.

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