US, Canada to take 50% of world LNG supply by 2015: Consultant

Houston (Platts)--18May2006

The Atlantic Basin by 2015 will account for half of the global liquefied
natural gas trade, an amount equal to the volumes imported by the Asia Pacific
region, which has been the world's leading LNG importer since 2000, according
to forecasts by consultant Poten & Partners.

The most significant contributor to the Atlantic Basin demand growth is
the United States and Canada, which will make up 50% of the Atlantic Basin
LNG demand by 2015, said Poten & Partners' general manager of LNG/Gas
consulting Gabriel Avgerinos Thursday at the Platts LNG conference in Houston.

Poten and Partners is forecasting an "aggressive" LNG import growth to
about 15 Bcf/d by about 2012, higher than the US Energy Information
Administration's predictions of 10 to 15 Bcf/d.

Avgerinos said the actual LNG import contractual commitments by North
America up till 2010 are "tracking relatively close or at about 80% or so of
our LNG import forecast."

Import terminal infrastructure will not be a constraint to the predicted
import volumes, he added.

"North America can take about 60% of the global LNG trade in its existing
import infrastructure," he said.

Avgerinos also predicted that between six and 10 new LNG terminals will
be built by 2012, in addition to the five exisitng ones in North America. Of
these, one to two would be located on the East Coast, at most one to two in
the West Coast, and the remaining four to six in the Gulf Coast, he said.

With one proposed project each already shortlisted or selected in the
East and West Coast -- to be sited in Canada and Baja Mexico respectively,
this leaves at most one other project each likely to materialize in both
coasts, he noted.

Almost all of the six to 10 new terminals will be immediately expanded to
double or triple their capacities and the fully expanded terminals will be
adequate for the import of 50 million to 100 million mt/year of LNG or more,
he added.

In new LNG markets such as India and China, however, Poten & Partners
predicts that there will be much more modest growth primarily because of the
price factor. India and China are not as aggressive buyers as Japan, Taiwan,
South Korea or the Atlantic Basin, he added. Coal and nuclear power
generation, in the long term, may be factors that will constrain LNG
demand growth in China and India, Avgerinos said.

China will likely have three LNG import terminals operating by about
2014-2015, far less than the 12 or 15 as proposed, Avgerinos predicted.
China's first ever LNG import terminal, sited in the southern Guangdong
province, is scheduled to receive its first shipment late this month. The
country's second LNG terminal, in Fujian province, is expected to be online in
early 2008.

In India, "the honeymoon period of various contracts that have had low
prices are going to be over by 2007-2008, and prices will be much higher which
will constrain the demand for LNG growth," he noted.

Elsewhere, the growth of LNG demand in Japan -- currently the world's
largest LNG importer at roughly 55 million mt/year -- would also be modest at
1% to 2% annually, while South Korea's LNG demand growth would be "more
aggressive," Avgerinos said.

On the supply side, although there are many new projects scheduled to
come onstream by 2010, almost 90% of the new production capacity has already
been committed, Avgerinos noted.

Between now and 2010, there is a "very, very, very tight supply"
situation, he said.

By 2015, however, there are an additional 50 million mt/year or so of new
capacity that are now being negotiated or discussed between buyers and sellers
that could be available starting around 2011, he added.

But demand is not lacking for capacity scheduled to come online after
2010. "The line is out the door in terms of buyers who are courting Australian
producers today for supplies that will be available in 2010-2012 from projects
such as Pluto, Browse and Gorgon," Avgerinos said. LNG supplies from these
Australian projects are very much in demand by buyers not just in Asia, but
also in the Atlantic Basin, he added.

---KimFeng Wong, kim_f_wong@platts.com

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