Asian prices of liquefied natural gas (LNG) will stay high for at least seven years as Japan turns away from nuclear power and emerging markets boost import capacity to fill unprecedented demand, industry officials said on Tuesday.
Asian spot LNG prices have skyrocketed to above $16 per million British thermal units (mmBtu) since the March 11 earthquake and tsunami in Japan, when prices stood around $10 per mmBtu. LNG-AS
Imports into Japan hit records in August as the world's top importer continues to struggle with power generation after the quake knocked out a large portion of its nuclear power supply.
"Put simply, markets are expected to continue to tighten," Anthony Barker, general manager of BG Singapore Gas Marketing , said at an industry conference, addding that economic recovery in emerging markets and the impact of the Japan earthquake dissasters had helped push demand to outpace supply.
Limited investment in LNG import infrastructure in Asia and delays in Australian projects are likely to keep supplies tight in the region until 2018, said Abdul Rahim Hashim, president of the Malaysian Gas Association.
"There may be insufficient LNG in the Atlantic portfolio to balance the Pacific market and some Asian buyers may become dependent on additional LNG from Qatar," he said.
Top LNG exporter Qatar is boosting shipments to Asia, while fourth largest exporter Australia has more than $200 billion worth of LNG projects on the drawing board and aims to triple production to 60 million tonnes a year by 2020 to help meet Asian demand.
Rising energy demand in China and India is expected to fuel some demand, while Southeast Asian nations such as Singapore, Indonesia, Malaysia, Pakistan, Bangladesh, Vietnam, and the Philippines are also expected to become LNG importers in the next few years. Southeast Asian demand is estimated to reach nearly 25 million tonnes by 2020.
Chinese LNG demand is expected to reach more than 30 million tonnes a year by 2015, and the nation is expected to surpass South Korea as the No. 2 LNG importer by around 2020.
India's LNG import capacity is expected to surge to 47.5 million tonnes annually in 2015/16 and 62.5 mtpa in 2019/20, said R.K. Garg, finance director for Petronet LNG .
But India's LNG demand is very cost-sensitive and imports are seen limited if prices stay at current levels, Garg said.
The Philippines aims to begin importing LNG in four to five years and is in talks with U.S., Canadian and Australian suppliers, Philippine Energy Undersecretary Jose Layug said.