LONDON Feb 21 U.S. liquefied natural gas (LNG)
by the end of the decade is likely to challenge Russian gas for
market share in Europe as the region becomes increasingly
dependent on imports, ConocoPhillips' head of LNG trading said.
A surge in production worldwide, driven by new projects in
the United States, Australia, East Africa, Russia and Canada,
could double LNG output to 600 million tonnes annually from 2018
and provide ample new supply to global markets, industry
Kicking off the export growth, after years of stagnating
supply, will be Exxon Mobil's Papau New Guinea LNG plant
in the third-quarter of this year, followed by BG Group's
Queensland Curtis project in Australia by year-end.
Most new Australian and east Africa supplies are expected to
reach Asia to fill demand, while significant output from the
United States and elsewhere is expected to arrive at European
"We believe that the European gas market will be a balancing
market for global gas," said Birger Balteskard, global LNG
marketing manager at ConocoPhillips, told the
International Petroleum Week industry conference.
Balteskard said Europe's dependence on gas imports will grow
as its domestic fields age and that America's proposed LNG
export terminals will help meet that need.
"There is a potential large gap between demand and supply
into Europe. We think by 2025 that will be as much as 25
(billion cubic feet) a day, which is significant," Balteskard
The United States, meanwhile, is producing record amounts of
gas from shale, and more than a dozen export projects have been
proposed, some of which could target Europe from 2015 onwards.
Europe's biggest supplier Russia charges high prices for
supplies, offering U.S. LNG shippers a chance to grab market
share through cut-rate deals.
In Europe, a case could be made that "there will be
competition between Russian pipe gas and LNG from the States and
potentially East Africa", Balteskard said.
ASIA STEPPING UP
In Asia, gas demand has outstripped supply. Japan, the
world's top LNG buyer, has shifted more to gas following the
2011 Fukushima nuclear disaster, while second-biggest buyer
South Korea has stepped up purchases after a nuclear safety
Asian gas prices currently trade above $20 per million
British thermal units, while European prices are around $10 per
Atlantic Basin LNG producers have in recent years diverted
cargoes to the higher-paying Asian and South American markets,
halving Europe's intake.
But as producers open the taps from new projects to fill
Asian demand, and as Mexico and some South American energy
producers work to wean themselves off costly LNG imports,
deliveries to Europe could rebound.
Some uncertainties remain, however, that could still skew
If China's demand grows faster than expected, it could
potentially limit the availability of gas supplies to Europe.
Similarly, any decision by top LNG importer Japan to uphold its
atomic energy ban means it will need gas to meet any growth in
"Assuming East Africa, the U.S. and Australia do happen the
way we think, the main thing to look at is what is going on in
China. How much energy will it be able to absorb?" Balteskard