29-04-04 US Federal Reserve chairman Alan Greenspan's warning of dramatic oil and gas price rises is bad news for the global economy but industry leaders say it heralds an Australian natural gas export boom.
A "dramatic" rise in oil and gas futures prices was "an economic event that can significantly affect the long-term path of the US economy", Dr Greenspan said.

He said the US would need to tap "the vast world reserves of gas" if the American natural gas market were to function with the flexibility exhibited by the oil market. Arthur Dixon, who leads Gorgon Australian LNG, the joint venture company that runs Australia's largest gas reserves, said Dr Greenspan's statement marks a "game changer in the industry".
"The big one that's really going to affect this is the US is going to import LNG," he said. "More importantly, they're doing it on the West Coast."

Until recently gas prices have been too low and transport costs too high to contemplate supplying the US with Australian gas. But a dramatic gas price spike has changed the equation, together with a dozen new LNG reliquefaction terminals proposed for the US and Mexican west coasts.
Four of the most advanced of those terminals are owned by partners in Gorgon. The steep and apparently lasting rise in American gas prices has coincided with a dramatic rise in Chinese anticipated demand.

Government sources in China expect that new LNG terminals for Zhejiang province and possibly Shanghai may receive government approval by mid-year, opening the way for a new rash of multi-billion dollar gas supply deals.
John Banner, president of Australian LNG (which fronts the North-West Shelf project), said his company was focused on supplying gas to Guangdong in increments beyond the $ 20 bn deal signed two years ago. The first shipment is due in 2006.

Dr Greenspan's remarks came on the same day Australia's Trade Minister, Mark Vaile, confirmed the scoping study for a free trade agreement with China should be finished by March next year, six months earlier than previously proposed. Mr Vaile had opened the Shanghai office for Gorgon Australian LNG.
America's leading energy bureaucrat, Spencer Abraham, toured Sydney and Melbourne in January to tell local LNG industry leaders that the US needed new gas suppliers. Gas demand in both north-east Asia and the US is projected to double by 2015.

Source: The Sydney Morning Herald