Europe and Asia may attract most winter LNG cargoes


Europe and Asia may attract the most liquefied natural gas cargoes during the northern-hemisphere winter amid falling prices and lower industrial use in the US, an analyst at Cambridge Energy Research Associates said. Daily LNG production capacity worldwide may increase by 5bn cu ft in the two years to December 31, Robert Ineson, CERA’s North American natural gas analyst, said by telephone from Houston. That would bring total output capacity at the end of 2006 to 25bn cu ft a day, based on figures from the Apache Corp website.The US, the single biggest gas market, will “only capture 20% of the incremental’’ rise, Ineson said. Four billion cubic feet a day of the expected output will be shipped to other markets, almost all in Asia and Europe, he said. High US stores of the fuel may also mean that Asia and the UK, Europe’s biggest consumer of natural gas, will have to pay less this winter compared with the one past to attract cargoes, CERA said. US gas prices in New York have fallen by more than 50% since December. UK gas prices have also declined from highs reached in March. US prices were as high as $15.78 in December, having risen more than eightfold since September 2001. Prices for LNG cargoes may not reach as high as the $19 reported for some shipments last winter, Ineson said.Global growth in LNG demand is expected to be about 10% a year through 2020, Shell chief executive Jeroen van der Veer said at the World Gas Conference in Amsterdam. Shell is targeting LNG production capacity growth of 14% annually between 2004 and 2009, he said.“Much more gas will have to cross border,’’ Van der Veer said. “Qatar, Nigeria and Australia will account for a major share of the expansion in LNG.’’ Gazprom, the world’s biggest natural-gas producer, told the conference it’s investing $11bn a year to develop its reserves and transport fuel to customers, seeking to ensure the company can meet demand for the fuel. Gazprom has “significant’’ untapped resources, chief executive officer Alexei Miller said. The company will base its output on demand from customers who are willing to pay market prices, he said. Customers should not rush to rely on LNG over piped gas, Miller said, adding he was “skeptical’’ LNG would resolve the lack of energy security. – Bloomberg