Growing demand will drive significant opportunities for unconventional gas in Asia
However, the key question for most of Asia would be where the new gas supplies are to meet this growing demand.,,
Against the background of growing gas demand in Asia and declining domestic production of gas in Asian countries such as Malaysia, Thailand and Indonesia, the important question for Asian policymakers would be finding new gas supplies to meet the shortfall between demand and supply. Although liquefied natural gas (LNG) import is a potential option, unconventional gas may be a more cost-competitive alternative for many of the Asian countries outside Singapore.
Taking a global view of the sources of unconventional gas, Rajnish Goswami, Head of Gas and Power Consulting for Asia- Pacific and Middle East, Wood Mackenzie, identified Australia and North America as the key suppliers in the next decade.
Australia will soon overtake Qatar and become the largest LNG exporter in the world, with 75 to 80 million tonnes of gas to be developed. He also noted that growth in production of shale and unconventional gas in North America in recent years has been driven by capital investments amounting to approximately US$150 billion. This is evident from the net incremental growth of US shale gas from 2009 to 2011 of 11 billion cubic feet per day, which is equivalent to the demand of Japan, the world's largest LNG importer. The rapid growth of shale gas production in US has also lead to the recent discussion on North America shale gas exports.
Notwithstanding the cross-commodity and regulatory risk, Rajnish is of the view that US exports will happen. Based on the forward oil prices in Henry Hub, US LNG prices could become more competitive for some buyers in Asia. Within North America, Canada is also expected to export LNG by the end of the decade with a higher price, with less of a regulatory risk relative to the US.
Rajnish left the audience with three key takeaways. Firstly, Asia would drive the global gas demand growth, creating a significant market opportunity for unconventional gas. Secondly, North America and Australia would remain the hotspots for unconventional gas, but there is real potential to be found in Asia. Lastly, policymakers and governments would have a major role to play unlocking Asia's potential in order to replicate the success story of North American in Asian countries.
By :Vivienne Low, EMA