By ADRIENNE BLUME
Goyang City, KOREA -- After a delegate luncheon
sponsored by Oman LNG, the first day of Gastech 2014
continued with an afternoon panel session on strategies for
securing Asia's gas demand, from a supplier-side perspective.
Moderater Mark Rowley, a partner at Baker Botts LLP, noted
that the emergence of new LNG projects would be a large
determining factor in the price of LNG going forward. "Not
all projects are created equal," Rowley said. Greenfield and
brownfield projects around the world have different elements
that will affect the price of LNG supplies from these
LNG: Brownfield vs. greenfield. Among the
panelists was Pierre Breber, the corporate VP and president
of Chevron Gas and Midstream. He expanded on Rowley's ideas
by separating the LNG supply wave into brownfield and
greenfield projects. "My view is that we're going to need all
sources of natural gas supply to meet Asian gas demand in the
years ahead," and LNG will be key to meeting this demand, he
By 2025, Asian demand for LNG will double, and new brownfield
s in the US will be needed
to meet this demand, Breber said. The advantages of
brownfield LNG projects include access to low-cost gas
resources, in-place pipelines that can be reversed, and tanks
and jetties that are already built. However, the risks of
cost escalation and project delays still exist.
Breber then discussed the next wave of LNG after the US
brownfield projects come onstream. Greenfield project
s represent a
100-million-ton-per-year (MMtpy) supply opportunity. The next
wave of LNG will require a different value proposition,
however. For example, LNG buyers must be invited to take
upstream ownership, and "buyers and sellers must come
together on contracts that are mutually beneficial."
One direction for LNG project costs: Up.
Another panelist, Rob S. Franklin, the corporate VP and
president of ExxonMobil Gas and Power Marketing, spoke to the
competitiveness of natural gas and the issue of supply
diversification. ExxonMobil expects LNG demand to triple to
650 MMtpy by 2040, with Asia-Pacific providing more than 75%
of that demand.
Franklin sees further geographic diversity of LNG supply with
new players entering the market. Presently, around 60 LNG
projects are under consideration worldwide; however, only the
most economically viable projects will be built. East Africa
has the potential to become a major LNG player, although
there is limited infrastructure in place to move this gas to
market. "This infrastructure will have to be built from
scratch, under regulatory frameworks that have yet to be
implemented," Franklin noted.
The proposed 60 projects represent 80 MMtpy of capacity, at a
cost of approximately $20 billion per project, or more than
quadruple the cost for LNG projects developed between 2001
and 2010. "With many projects being proposed ... project
costs are unlikely to go
down," Franklin said. New pricing solutions, such as Henry
Hub linkage and short-term contracts, are feasible, but
long-term contracts will still be needed to create a durable,
stable, long-term LNG supply chain.