update needed, page-26

Cheaper American LNG. Don't discount the fact that we are also living in a wholesale gas market that isn'
t disimliar to Henry Hub prices. Our scenario will change with the massive demand spike which is coming, but right now reserves such as WCL's are cheap.

Look to America and there are a few factors to consider if anyone thinks there is about to be a gas glut and LNG surplus thanks to shale gas. To dispel this myth, you need to look at the fuel mix in Asia, see how China is pushing into gas deals knowing full well it is energy poor if and when traditional liquid transport fuels become more expensive. Here we are looking at 2025 maybe 2030, but we all know it is coming. So do the Americans.

There are significant interest groups in the US debating whether they should sell their gas, some LNG export proposals are already approved, but given the importance of this whole equation to the US and the unsustainable cost associated importing middle east oil/ fighting wars/supporting Middle East regimes, I think they will opt to sell more IT software and keep most of the gas. This is the world's largest economy going broke and one reason for that is they import so much energy. And shale oil is pulling Obama out of this very quagmire via the jobs boom. connected to shale production. So forget about 30 mt's p.a from the US, we might see 10 mt p.a with the American people questioning the economic sense of giving energy to Asia to buy Saudi oil.

Meanwhile China sits with a 5 year plan to increase nat gas usage to 10% from whatever it is now 6 ro 4 % can't remember. Globally US and Europe the energy mix is 20% for nat gas. Petrochina has a mandate to secure that gas as does CNPC...and they are with fat chequebooks, but this scenario can't be properly understood unless you consider this fuel might be needed to drive our cars in 20 years if oil prices go too high..So the scenario in Qld right now with the CNPC subs people stanbding on the Fish landing site smiling ( despite i would venture the Gillard's efforts to stymie some of this investment), is connected to long range energy security issues and not about whether there could be a surplus of US exports of LNG. We've been hearing about this LNG surplus since 2008 and the crisis and it hasn't materialized yet.

The reason for that is LNG is a versatile fuel but it takes ages to get new plants going, and meanwhile demand is growing very fast.

A bit of a ramble I know, but I'm only trying to impart my sense of what I see playing out here