japan's nuclear crisis likely to boost demand

from Aust today.

this article gives more detail wrt to Knox comments yesterday.

whilst Icon has a Chinese customer under its GSA, this confirmation of the anticipated surge in demand from Japan, plus the prediction of a balancing of supply and demand, will put pressure on all LNG players.

it will encourage the Chinese to secure the LNG from Icon, it will encourage financiers to provide funding, and it will encourage providers of infrastructure.

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THE Fukushima nuclear disaster has spurred a jump of up to 10 per cent in Japanese demand for liquefied natural gas and could move the oversupplied global LNG market into balance over the next year, industry experts say.
Speaking yesterday on The Australian-UBS Market Insights Panel, Santos chief executive David Knox said Japanese LNG buyers were already approaching suppliers, looking for fuel to help fill the gap left by the big power supply outages from the earthquake and tsunami.

"Effectively they're going to be asking for 10 per cent more LNG supply for the next few years," Mr Knox said.

"In the longer term, it will be much more interesting because we have globally been assuming that nuclear stations will be built . . . if those stations are delayed, even by a few years, it will make quite a substantial change in LNG demand."

Santos this year started building the $18 billion Gladstone LNG project, for which it has lined up Korean and Malaysian customers.

The extra demand from Japan, the world's biggest LNG importer, will almost match the 7.8 million tonnes a year planned to be produced by GLNG, and is expected to provide opportunities for Australia's growing LNG industry.

Mr Knox said Japan buys about 75 million tonnes of LNG a year.

He said about 20GW of its nuclear and coal power generation capacity -- the equivalent of 40 per cent of Australia's current power capacity -- had been knocked out by the disasters.

Before the earthquake, analysts were forecasting an LNG supply shortage would not emerge until 2016. To some extent, the oversupplied market has hindered the efforts of new Australian projects, particularly the untested coal-seam-gas-to-LNG plants planned for Gladstone, to secure customers for their plants, which are due to start producing in the next three or four years.

UBS analyst Gordon Ramsay said Japan's disasters would rapidly bring forward an expected global supply and demand balance that was previously not forecast to happen until 2014 or 2015.

"The market could go into balance in the next year or so and that's very important for Australian producers," Mr Ramsay said.

"Longer term, the view is that there will be less nuclear power built and additional LNG will be consumed.

"It's certainly positive for new projects that are being promoted in Australia that are looking for Japanese customers."

As well as extra demand from Japan to make up their shortfall, which UBS is estimating at 5 million tonnes a year, instability in the Middle East was also presenting potential supply problems, he said.

Origin Energy chief executive Grant King, whose company is planning to approve the Australia Pacific LNG project at Gladstone this year, said Fukushima would reduce the competitiveness of nuclear energy by requiring more stringent and expensive safeguards.

"I think that only reflects an increased demand for natural gas -- we know how to use gas, we know how to produce it, we know how to generate power from it and I don't believe it will involve any risks that aren't already well known and understood," Mr King said.