OTC '18: East Asia to drive LNG market expansion
By: Adrienne Blume, Executive Editor
HOUSTON—At a Wednesday morning Industry Breakfast at the 2018 Offshore Technology Conference (OTC), speakers discussed developing LNG markets in Asia. Ian Steff, Deputy Assistant Secretary for Manufacturing at the US Department of Commerce's International Trade Administration, moderated the session.
Steff noted that the Trump administration is committed to responsibly developing the US' offshore resources and its oil and gas export industry. "One way the Commerce Department plans to bolster export efforts is through our Advocacy Center," he said.
At present, the Center is handling projects worth a collective $100 B. In March, it also launched a new "Access Asia" program to positively impact the US trade deficit by expanding the US' export partners in Asia, Steff noted.
Japan at forefront of East Asian LNG expansion. Panelist Takuma Iino, Deputy Director of the Petroleum and Natural Gas Division at Japan's Ministry of Economy, Trade
Iino also noted that because the US LNG sector is more market-oriented and does not stipulate long-term contracts, Japan will continue to import LNG from the US. Japan imports from the Sabine Pass and Cove Point terminals, and it plans to import from the Freeport and Cameron projects after they start operations.
US exports cater to Asian demand. Robert Fee, Chief of Staff at Cheniere Energy, next talked about Cheniere's two LNG projects—Sabine Pass in Cameron Parish, Louisiana and Corpus Christi LNG in Corpus Christi, Texas. The massive projects, made possible by the shale gas revolution in the US, are transforming the energy export landscape of the US, Fee said.
The Sabine Pass terminal, originally designed as a regasification terminal, has exported approximately 300 cargoes of LNG since February 2016, with more than 200 of those delivered in 2017. Of the cargoes exported last year, 46% were delivered to Asia. Meanwhile, the Corpus Christi plant will be the first greenfield LNG terminal in the US, Fee noted.
In the US alone, 30 Bft3d of LNG projects are under construction, driving competition globally. "If you look at the fundamentals for LNG, the growth fundamentals are strong, and a lot of this demand is coming from Asia,"
Global LNG welcomes incoming Asian markets. Alex Munton, Principal Analyst, Americas LNG Research at Wood Mackenzie, closed out the panel session with a talk on the regions driving Asian LNG demand. At present, 11 Asian markets are importing LNG—Bangladesh, China, India, Indonesia, Japan, Malaysia, Pakistan, Singapore, South Korea, Taiwan
Driving this growth is a combination of interrelated factors, including more competitive LNG pricing, clean air policies, market liberalization and insufficient pipeline supplies. "We see the balance shifting in a lot of these countries from pipeline supplies to LNG. We also see increasing dependency on gas demand overall, and increasing dependency on LNG," Munton said.
The reason why LNG is making strong inroads into these markets is
"The US LNG market is a fully liberalized, open market with many buyers and many sellers," he continued. "It's a very well-developed market with the necessary infrastructure. But, in Asia, it's very different. You don't have the same level of market liquidity or access to infrastructure as in the US."
However, this less developed Asian LNG market structure provides significant opportunities for US LNG to increasingly enter Asia, Munton said, in closing.
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