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Price rises for LNG to end in Asia-Pacific soon, consultancy says

High prices of liquefied natural gas across the Asia-Pacific region are expected to continue in the near term but there are increasing signs that they will erode as a result of rising local production, US exports, and the region's diversification of energy supplies, according to research and consulting firm GlobalData.

Oil and gas analyst James Hand said that despite the likeliness of an LNG price crash in the future, the US$19 billion (Bt617-billion) Papua New Guinea LNG Project led by ExxonMobil was very well placed.

"As well as a lower-operating-cost advantage, the PNG LNG Project also has close proximity to the major demand markets in East Asia, along with favourable fiscal terms offered by the government and a high probability of adding more liquefaction trains at very low additional costs," he said.

According to GlobalData, the project holds gas accumulations of about 9 trillion cubic feet and is one of only two large-scale LNG projects to begin production in the Asia-Pacific region this year, alongside the Queensland Curtis LNG Project in Australia.

Upstream production from the PNG project will flow for 30 years, exported through 725 kilometres of pipeline to Port Moresby, where gas will be liquefied by two LNG trains and exported internationally at a rate of 6.9 million tonnes per year, GlobalData says.

Furthermore, the break-even gas price of the project is about $6.60 per million British thermal units, offering substantial cushioning from potential LNG price shocks once the facility comes online in mid-2014.

"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," Hand said.

"In fact, Australia is looking to become the world's primary LNG exporter by the end of this decade, overtaking Qatar."


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