U.S. shale gas boom to increase global LNG supply
* Wary Asian buyers hold off on long-term contracts
* Chevron has contracts for only 65 pct of $54 bln Gorgon output
By Oleg Vukmanovic and Jacob Gronholt-Pedersen
MILAN/SINGAPORE, Aug 26 (Reuters) – U.S. oil major Chevron is struggling to lock-in 20-year sales contracts for its Gorgon liquefied natural gas (LNG) export plant in Australia, the world’s most expensive, as buyers spoiled for choice by new suppliers hold out for cheaper deals.
The high level of unsold LNG shows how the U.S. shale gas boom has played havoc with major investments now coming to fruition in Australia, and threatens to undermine the industry’s traditional sales model where projects tie up forward sales in long-term contracts.
Nearly $200 billion worth of gas projects are nearing completion in Australia, with seven LNG projects due to start exporting gas between late 2014 and 2017, making the country the world’s largest producer of the fuel.
As well as Gorgon, other projects include BG Group’s Curtis Island, Conoco and Origin’s Australia Pacific, Inpex’s Ichthys, Shell’s Prelude and Santos’ Gladstone.
But with LNG exports from the United States due to begin next year, buyers are more cautious about locking in 20-25 year contracts. For the Australian mega-projects, already stung by soaring costs, this means more uncertainty. Continued…