Asian gas demand and subsequent projects slow down

June 10, 1998 Natural gas demand in Asia is expected to grow at a slower rate of 4.4 % a year up to the end of the century and 3.5 % a year between 2000 and 2010 due to the severe economic recession hitting the region.
This gloomy projection was made by Muri Muhammad, vice president of Malaysian Petronas who said the past 10 years had seen a strong 7.2 % a year growth in natural gas demand, the highest in the world compared to 3.2 % a year for North America and 3.4 % a year in Europe.
Due to economic downturn, the Asian region was anticipated to dampen its consumption of LNG in the short to medium term, Mr Muri said.
Gas demand in Asia would be 12 tcf by 2010, down from 16 tcf as previously projected. The 16 tcf demand will be achieved only by the year 2014, he added. This would be helped by China, where natural gas demand will rise from less than 1 tcf to 6.5 tcf by 2020, making it Asia's largest market. The impact of economic downturn on gas consumption was already being felt, he added.

KoreaPower Corp, which accounts for half of South Korea's LNG consumption, plans to cut back on LNG purchases in 1998. South Korea has already cancelled 15 cargoes, totalling 600,000 t, from Indonesia and 3 cargoes, totalling 170,000 t, from Malaysia.
Similarly, Taiwan through its Chinese Petroleum Corp has reduced 2 cargoes, totalling 118,000 t, from Malaysia, he disclosed.
There is also a delay in new LNG projects and contracts. Thailand has postponed by 4 years a 2.2 mm tpy LNG purchase agreement with Oman which previously was to commence delivery from 2003. Thailand has also delayed the purchase of pipeline gas from Indonesia's Natuna field from 2003 to 2007.
Mr Muri noted that the near term reduction in natural gas demand will result in investment in greenfield gas projects to be put on hold as problems of the Asian crisis looms in the global economy.
A $ 6.5 bn expansion programme to double the current 7.5 mm tpy LNG producing capacity at Australia's North West Shelf LNG complex are reportedly being slowed down. LNG demand in Japan has also been contracting due to the economic crisis.
Among other projects that have been delayed or postponed are the proposed Papua New Guinea LNG plant, Gorgon LNG plant in Australia, a gas trunk line from the Erawan field in the Gulf of Thailand to Bangkok and Indonesia's Trans'Java natural gas pipeline.