(EnergyAsia, January 29 2013, Tuesday) — Asia could face higher liquefied natural gas (LNG) prices as global demand for the fuel is set to exceed supply this year, said Steve Hill, vice president of global LNG and oil marketing at UK’s BG Group.

LNG spot prices in Asia have stayed stubbornly in the US$15-$20 per million Btu (mmBtu) range since Japan began ramping up imports to compensate for the loss of its massive nuclear power capacity in the wake of the Fukushima earthquake in March 2011.

Prices are on the rise again, recently reaching $18 per million Btu and look set to break the US$20 mark amid rising demand from China, India and other Asian economies.

At an industry conference in Singapore last week, Mr Hill said the global LNG trade volume last year fell for the first time in its history on reduced production. He estimated that the volume traded fell by 2.5 million tons compared with a rise of 19 million tons in 2011.

Last year, the industry traded around 240 million tons of LNG, which accounts for around 10% of the world’s natural gas markets. LNG supplies will stay tight till 2015 when the first of a handful of new major projects in Australia and Asia are expected to begin production.

Mr Hill said he expects production from

With existing gas fields forecast to decline by 1.5 trillion cubic metres (cbm) a year, Mr Hill said new production will have to rise by 9% a year or 2.4 trillion cbm a year just to meet demand growth.

The industry has also been hit by rising cost with investors like ExxonMobil, Shell, Chevron and Asian state-owned companies forced to raise their budgets on planned, proposed and on-going projects.