PERTH - Demand for liquefied natural gas (LNG) in Asia-Pacific is showing early signs of a pickup and its recovery is set to outstrip the pace of supply growth, Australia's Woodside Petroleum Ltd said on Tuesday.
Woodside, operator of the North West Shelf LNG project in western Australia, said although the market is expected to see a surge in new supply in the next 12-18 months, slippage in project schedules will mean that the market will rebalance and significantly tighten after 2012.
The world still needs a Gorgon or a Browse-sized LNG project to be sanctioned every year to meet demand, Reinhardt Matisons, president of LNG Marketing at Woodside, said at an investor's briefing.
Several analysts, including Poten & Partners and FACTS Energy, expect global LNG demand to double from current levels to about 400 million tonnes per annum (mtpa) by 2020.
Strong growth in long-term LNG demand, combined with a tight market, would mean that the gas pricing in Asia-Pacific would remain linked to oil prices, Woodside said.
In a sign that market sentiment for short-term LNG demand was also changing, Matisons said many Japanese utilities were now planning to restart their gas-fired power plants over the coming year, as electricity consumption picks up on the back of an economic recovery.
Woodside, which is currently building the 4.3 mtpa Pluto LNG project in western Australia, is realigning its business to focus on the LNG business and has ambitious plans to swiftly expand its suite of gas projects.
It is targeting to add a second and third production train at Pluto by 2010 and 2011, respectively, and is also hoping to approve LNG projects in the Browse Basin and Timor Sea by the end of 2011.
Woodside said on Tuesday it does not rule out raising fresh equity to fund its LNG growth strategy, but would only seek additional money from shareholders if its proposed projects get built to its preferred timetable. (Reporting by Fayen Wong; Editing by Himani Sarkar)