(EnergyAsia, May 16 2014, Friday) — Liquefied natural gas (LNG) prices across the Asia-Pacific region will come under pressure in the near term on rising production in the region and likely exports from the US, said consultant GlobalData.
Its analyst James Hand cites the impending start-up of the ExxonMobil-led US$19 billion project in Papua New Guinea (PNG) and the US$20 billion Queensland Curtis project in Australia as major contributors to near-term price weakness. Both projects are due to start up this year.
“As well as a lower operating cost advantage, the PNG LNG project also has a close proximity to the major demand markets in East Asia, along with favorable fiscal terms offered by the government and a high probability of adding more liquefaction trains at very low additional costs,” he said.
Drawing on approximately nine trillion cubic feet of gas reserves over the next 30 years, the PNG project includes two trains to export a total of 6.9 million metric tons of LNG per year, said GlobalData. A network of 720km of pipelines connects the natural gas fields to the LNG terminal at Port Moresby.
GlobalData estimates the project’s breakeven price at US$6.6 per million British thermal unit, offering substantial cushioning from potential LNG price shocks.
“As LNG projects come on-stream over the next four to five years, most notably from Australia, but also from the Middle East, Africa and North America, the supply of LNG into Asia is expected to increase considerably,” said Mr Hand.