Boost For Brunei LNG
by Bru Direct
Bandar Seri Begawan - Brunei Darussalam stands to gain from the rising demand of Liquefied Natural Gas (LNG) with the emergence of new buyers, and growth of world LNG trade driven by the decline in fossil fuels in gas-consuming countries, if it can utilise its role as an exporter to influence the general trend of price terms.
It was revealed that LNG trade accounted for about six percent of the world's natural gas consumption and about 26 percent of total international natural gas trade in 2002, yesterday at an energy-talk symposium between the Brunei Energy Association (BEnA) and the Brunei-Korea Association for Friendship (B-KAF).
Present yesterday were representatives from the Korea Gas Corporation (KOGAS), the world's single largest LNG buyer that imported 24.6 million tonnes alone last year. The sultanate may benefit substantially if able to cater for this growing demand in LNG where KOGAS' estimated total imports this year will hit 24.9 million tonnes, an increase of 0.3 million.
Japan, South Korea, and Taiwan generally depend on LNG more than 90 percent of the time for their natural gas needs.
In addition, the long-term contracts that drive the LNG market have been showing more flexibility in the recent years. For example, some of the newer contracts are designed to provide only a base supply of LNG which can be supplemented by short-term contracts during periods of high demand.
Another significant market-change in terms of contracts and pricing is that the majority of importing companies are seeking increased flexibility and better contract terms. Traditionally, LNG contracts focused on the security of the supply for the buyer. Long-term contracts of 20-25 years were rigid with LNG being transported in designated tankers.
However, in the competitive environment of today, the market believes that the sellers of LNG have heavily influenced the general trend of price terms.
Furthermore, large multinationals have been investing heavily in liquefaction plants such as the one in Darwin, Australia where both Tokyo Gas and the Tokyo Electric Power Company have both invested in.
New buyers have also been emerging, including independent power producers in Puerto Rico and the Dominican Republic.
`Looking at it from a larger perspective, LNG will account for 25 percent of the world's primary energy consumption by the year 2020, an increase of one percent taken from statistics in 2003.
Projections also show that global LNG demand will increase by 56 percent in 2025 to around 3,475 million tonnes, a considerable rise from the 2,215 million tonnes in 2006. -- Courtesy of Borneo Bulletin