Will US LNG be the long-term solution for Asia?

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Douglas Wharton, Director Origination, Cheniere Marketing
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It has been predicted in the global energy mix that the share of natural gas will grow to 23% by 2030, driven primarily by growth in China, India and Southeast Asia.

With Cheniere’s Sabine Pass terminal starting production in 2016, the large amounts of LNG exports have begun to satisfy the increasing global demand of LNG. Ahead of the Gas Asia Summit in October, Gastech Insights spoke to one of the key speakers Douglas Wharton, Director Origination at Cheniere Marketing to discover more about the evolving market dynamics and where they see it heading.

Gastech Insights: US LNG exports have started and are beginning to satisfy Asia’s gas demand. Do you believe the US can maintain this supply and be the long-term solution?

Douglas Wharton: It is estimated that the US has over 2800 Tcf of proven and technically recoverable natural gas resources. At current rates of consumption this resource would last over 100 years, so it seems clear that the U.S. will be able to maintain supplies over the long-term. 

As the leading supplier of LNG from the United States, Cheniere is well positioned to satisfy Asia’s growing gas demand and thanks to abundant low-cost US gas resources, declining drilling costs and increased well productivity, Cheniere can source US natural gas and deliver LNG to customers in Asia at a price that is competitive and affordable. Cheniere is expected to be responsible for approximately half of all US export volumes in 2020 based on capacity under construction and we have plans to grow further with two additional LNG trains fully permitted and ready for construction. 

Gastech Insights: What would you identify as the key requirement to create a natural gas trading hub in Asia?

Douglas Wharton: Since starting LNG production at the Sabine Pass Liquefaction Terminal in February 2016, over 150 LNG cargoes have been loaded and delivered to 24 countries and counting. The US LNG model allows destination free, flexible FOB volumes to be delivered to anywhere in the world. This is already helping to create a more responsive, more competitive, more diverse and more resilient LNG trade system. US LNG will contribute the eventual formation of some type of natural gas trading hub in Asia, but only time will tell how that will happen and where.       

Gastech Insights: Despite global LNG demand forecast to rise by more than 30% between 2016-2020, Asia’s largest gas importers remain firmly in control. Do you believe it will remain a strong buyer market in the next 5 years?

Douglas Wharton: This is a good time to be a long-term buyer of LNG. Looking beyond the next few years, we already see the need for additional LNG supply to meet post-2020 demand growth. We forecast that nearly 150 million ton per annum of new liquefaction capacity will be required by 2030. LNG projects have long lead time from sanction to first LNG, between 4 to 6 years, so we are trying to make sure we can make countercyclical investment decisions and ensure sufficient long-term LNG supply is available to meet future demand.   

Gastech Insights: How would you describe the Gas Asia Summit to your peers and what aspect are you most looking forward to?

Douglas Wharton: The theme for the 2017 edition of the Gas Asia Summit, “Connecting the gas & LNG value chain across Asia”, captures both the challenge and opportunity we see in the Asian market.  In order for our industry to support the growth of natural gas demand in Asia, we need to find innovative ways to develop infrastructure, introduce LNG to new markets, and ensure natural gas secures its rightful place as a secure, sustainable and affordable fuel for the future.

The Gas Asia Summit will bring together key stakeholders in a forum that will allow the exchange of ideas and opportunities to network.; and Singapore is the ideal venue for the event.  

Share your insights and join the conversation: Do you agree with Douglas - What would you idenify as a key requirement to create a gas hub in Asia? Leave your comment below. 

Taking place on the 25-26th October in Singapore, the Gas Asia Summit will gather a global spectrum of VIPs, C-level executives, business leaders and technical experts. Book your place today. 

Image courtesy of Cheniere Marketing