Domestic demand likely to limit US exports of LNG, says RasGas executive


KUALA LUMPUR -- US exports of liquefied natural gas (LNG) are likely to be limited because of growing domestic demand, and won't greatly affect rival producers or the crude oil-based pricing of LNG in Asia, a senior executive at Qatar's RasGas said Wednesday.

"I don't see the US exporting large volumes," Hamad Rashid Al Mohannadi, managing director of RasGas, told reporters on the sidelines of a conference.

The US could see another natural gas revolution - an explosion in domestic demand - that could limit its exports as production there levels off, Mr. Mohannadi said.

Qatar, the world's largest LNG exporter, could face competition from US and Canadian companies looking to export LNG to Asian buyers.

Demand is surging in Asia, particularly in China and India, and in Japan while all of its nuclear reactors are offline. Mr. Mohannadi said RasGas is in discussions with several Indian buyers.

Ultimately, US LNG exports may only feed additional need for spot or short-term cargoes in Asia, while most buyers will continue to depend on already established LNG projects for the bulk of their long-term requirements, Mr. Mohannadi said.

So far, only one US project has received all of the regulatory approvals needed to export LNG.

But several have been proposed because gas prices remain at 10-year lows due to the boom in unconventional production, while prices in Asia are considerably higher.

Gas from unconventional resources such as shale now comprises 35% of total US gas output, up from only 1% a decade ago.

ExxonMobil, the largest gas producer in the US, said recently that it is exploring the possibility of exporting LNG from the US, but the industry remains unsure of how much LNG the US could export.

Mr. Mohannadi said planning for LNG export terminals in Canada has progressed more rapidly, but still faces financing challenges because of the worsening global economic outlook.

RasGas is operating at 100% of capacity in Qatar, and will produce 37 million metric tons of LNG this year, Mr. Mohannadi said, adding that no more maintenance shutdowns are planned for the year.

Dow Jones Newswires

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