Australia LNG Boom Unlikely To Be Overshadowed By The US

Online, July 24, 2012 (Newswire.com) - From 2012-2016 the LNG industry is forecast to grow its Capex by nearly 40% to $169 billion. Sharp increases in Asia gas demand as a function of economic growth and fuel switching (from nuclear and coal to natural gas) are driving this dramatic recovery in the industry. Furthermore, the supply mix is changing rapidly as Australia is set to become the world's leading exporter with seven additional facilities due onstream over the forecast period and the US looks to exploit existing import infrastructure as the basis of new export projects.

These factors are headlined in the new 7th edition of Douglas-Westwood's World LNG Market Forecast 2012-2016. The report forecasts capital expenditure in the LNG export, carrier and import sectors and is unparalleled in its detailed analysis and scrutiny of the industry.

Report author Murray Dormer commented that, "The geographic shift in emphasis from the Middle East to Australia is very clear in the outlook. Australia alone accounts for 63% of global LNG export terminal spend over the forecast period. Obviously such a massive build of infrastructure in one country brings with it challenges and we have seen problems emerging in terms of cost escalation, upstream production issues with CBM projects, logistical issues in remote areas, and labour disputes and shortages."

Much has been made in the industry of the potential for US LNG exports, with over 100mmtpa of export capacity applied for to-date. Douglas-Westwood take a more cautious view on the basis that whilst projects that exploit existing infrastructure will have an advantage (re-use of existing ports/jetties, storage tanks etc.) in terms of cost and timing, this will disappear once all the opportunities to convert current terminals are exhausted. Furthermore, there are few who believe US natural gas prices at $3 mmbtu are sustainable in the long term and Douglas-Westwood expect longer-term prices to be around double this level. This will likely put a ceiling on the number of projects and the export volumes that are completed.

Ultimately, taking a considered and conservative view of the prospects is vital in this industry and this has been the basis for our view of the industry.

For more information on the World LNG Market Forecast 2012-2016 visit:
http://www.douglas-westwood.com/shop/shop-infopage.php?longref=1009~0