According to Origin Energy – a company building an LNG export terminal in Australia – the world forecasts for LNG demand are underestimated, particularly in the face of China cutting its shale gas extraction estimates.
China, which recently halved its 2020 shale gas goals, is expected to account for one-third of additional gas demand by 2019 – Bloomberg reports.
“There’s quite a degree of difference of opinion as to the rate at which shale can be developed in China,” Origin’s Managing Director Grant King told Bloomberg. “There’s a lot at stake with respect to the development of the shale industry in China, and the geoscientists would say that it’s not without its challenges.”
Origin’s LNG development, scheduled to start production next year, is one of seven being built in Australia at a total cost of almost A$200 billion ($180 million) and forecast to make the nation the world’s biggest exporter. China Petrochemical Corp., known as Sinopec Group, is also a partner in Origin’s A$24.7 billion project.
“I’ve got no doubt that there will be shale production, and there will be successful projects,” King said. “Whether it is on the scale that’s envisaged in those current plans, that’s a more challenging question. That’s in part why I believe that in the long term, the estimates for global trade in gas, and in LNG, are probably underestimated.”
Australian LNG exporters will have to compete with American suppliers, with Cheniere Energy’s Sabne Pass terminal scheduled to be completed in the early 2015. Mr King does not seem concerned with the competition, though.
The U.S. has a “lengthy process” to get approval to build plants and export LNG, he told Bloomberg.
“The potential is there, but I don’t think it’s to the exclusion of further expansion of the industry in Australia,” particularly adding capacity at existing LNG plants, he said.
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