By Angela Macdonald-SmithEnlarge Image/DetailsJune 19...

By Angela Macdonald-Smith
Enlarge Image/Details

June 19 (Bloomberg) -- Woodside Petroleum Ltd., Australia's second-largest oil and gas producer, said the liquefied natural gas market will stay ``tight'' until 2015 and possibly beyond, driven by rising demand and delays in supply projects.

The market is ``buoyant'' and long-term LNG contract prices are approaching the crude oil equivalent, Perth-based Woodside, operator of the North West Shelf LNG venture, said today in a presentation sent to the Australian Stock Exchange. The introduction of a price on carbon could push LNG prices beyond crude, it said.

Woodside, 34 percent owned by Royal Dutch Shell Plc, last year approved the A$12 billion ($11.4 billion) Pluto LNG project for development, one of just three LNG projects worldwide to be sanctioned in the last three years. It is seeking gas for an expansion of the project, and has proposed LNG ventures at the Sunrise field in the Timor Sea and in the Browse Basin off the far northwest coast.

LNG from Australia is ``best placed to meet Asia-Pacific demand,'' Woodside said in the presentation, given by Chief Executive Officer Don Voelte today at a UBS AG conference in Sydney.

Cost escalation in the LNG industry is ``clear,'' Woodside said. The lowest-cost projects are typically established plants, dominated by national oil companies, tapping so-called rich gas fields that include liquids, it said. The most-expensive projects involve less energy-rich gas, with more ``difficult'' development, including LNG projects based on coal seam methane, it said.

The Pluto project will tap about 5 trillion cubic feet of gas and will require five or six wells, Woodside said. The plant will be built in about 270 modules, constructed in Thailand, it said. The North West Shelf venture's A$1.6 billion Angela project is due to start up next quarter, it said.

BHP Billiton Ltd., BP Plc, Chevron Corp., Shell and a venture between Mitsui & Co. and Mitsubishi Corp. have stakes in the A$20 billion North West Shelf venture, Australia's biggest LNG producer.