29-03-04

The International Gas Union (IGU) focused on LNG issues during its recent Executive Committee meeting held on 26 March 2004 in Doha, Qatar.

IGU sees a substantial potential for further growth of the LNG market and the international trade in LNG.

IGU confirms thereby the general views expressed during the LNG 14 Conference and Exhibition held on 21-24 March 2004, also in Doha. In order to realise this potential, IGU draws the attention to the following 7 points:
    -- Ever existing market uncertainties ask for enough flexibility in LNG contracts without losing the necessary fundamentals of long terms contracts
    -- To enable the LNG industry to make use of flexibility in contracts due attention by the relevant authorities should be given to set gas quality standards which will enhance the interchangeability of LNG supplies. IGU, together with other relevant international organisations will assist in developing such standards
    -- Contract flexibility together with LNG interchangeability will also greatly enhance security of supply, which in turn will enhance the further acceptance of natural gas as the fuel of choice by gas import dependent countries
    -- Governments, regional and national authorities are strongly recommended to support in a timely manner the realisation and necessary investments in re-gasification terminals by the LNG industry. At present, this lack in sense of urgency seems to be the most important factor leading to bottlenecks
    -- Although it is expected that costs of the LNG Chain will further decrease, a structural increase of gas prices should not be excluded due to the very strong demand from four major economic regions in the world: North America, India, China, and Europe
    -- The better the relevant authorities around the world are able to handle the "nimby" (i.e. "not in my backyard") syndrome, the higher the chances will be that the before mentioned price increases will not occur nor will they be mitigated
    -- Policy measures which run counter the proper functioning of the market forces (e.g. price caps, excluding certain sectors of using natural gas requiring third party access of re-gasification terminals, requiring construction of deliberate overcapacity) will deteriorate the business climate for the LNG industry to the detriment of economic growth and of the environment.

International Gas Union (IGU) is a global non-commercial, non-political and non-governmental organisation. Established in 1931 with the purpose to promote the technical and economic Progress of the gas industry, it now has 80 members from 67 Countries all over the world. IGU members are generally the most representative gas organisations or companies of a country, which may encompass producers, transporters, distributors, technological and scientific institutes.

IGU is registered in Vevey, Switzerland with the Secretariat located in Denmark, hosted by the National Danish Energy Company, DONG. IGU -- together with the Gas Technology Institute (GTI) and International Institute of Refrigeration (IIR) -- is official sponsor of the LNG Conferences of which LNG 14 was held in Doha on 21-24 March 2004.

Source: Pipeline Magazine