IEA says LNG underinvestment may lead to shortages after 2012

Nov 12, 2008 01:00 AM

Underinvestment in liquefied natural gas production plants may boost gas prices from 2012, the International Energy Agency (IEA) said.
"Shortfalls in the availability of LNG could push up prices and encourage the faster development of indigenous resources in importing regions,'' the IEA said in its World Energy Outlook 2008. Up to 2012 there will be a "massive expansion in LNG supply.''

Qatar, already the world's biggest exporter of the fuel, will start new LNG plants. Production is due to begin next year at Gazprom's Sakhalin-II project off Russia's east coast and at BP's Tangguh development in Indonesia. Any new surge in investment in LNG production is unlikely to increase output of the fuel before 2015 because of the time needed to build so-called liquefaction trains, the IEA said.
"Worldwide LNG flows have doubled in the past decade and now meet 7 % of total world demand for natural gas,'' the IEA said. The volume of LNG trade will rise to 340 bn cm in 2015 and 680 bn in 2030. It was201 bn cm in 2006.

This surge in LNG trading will be lead by demand in the European Union, where indigenous gas production is declining. By 2030, the EU will depend on imports of natural gas, through LNG ships and pipeline, to meet 86 % of demand, the IEA said. EU gas imports will rise to 580 bn by 2030 from 305 bn cm in 2006.
Most of the additional export volumes in the period to 2030 will come from the Middle East and Africa. LNG is gas chilled to liquid form for transportation by ocean-going tankers.

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