LNG boom to make Australia ''Middle East of gas''
August 31, 2009
As Asia''s rapidly growing economies queue up to buy Australia’s vast LNG reserves, it is poised to become "the Middle East of gas", reports the Associated Foreign Press. The government last week approved the massive Gorgon liquefied natural gas (LNG) project off Western Australia, which Prime Minister Kevin Rudd said would cost 50 billion dollars (41 billion US) to build and would generate 6,000 jobs. The joint venture by Chevron, Shell and ExxonMobil is already underpinned by supply contracts with China and India worth more than 60 billion US dollars, and more customers are likely to sign up before it begins operating in 2014. Gorgon is just one of a clutch of LNG projects planned in the next decade that analysts say will pump tens of billions of dollars into the economy and see Australia challenge Qatar as the world''s major gas exporter. With the $41 billion US supply contract with PetroChina this month, which is the largest trade deal in Australian history, the government said LNG was an important part of the country''s future prosperity. Asian demand for coal and iron ore have helped Australia''s economy avoid recession during the global downturn but LNG is expected to be the next boom commodity. The gas is liquefied for shipping abroad, where it is turned back into gas and distributed via pipeline. Australia’s government estimates they will quadruple LNG production to 60 million tons by 2015 if all currently planned projects proceed. Australia has the potential to become "the Middle East of gas" in coming decades as the world''s oil supplies dwindled. Western Australia is the centre of the LNG boom with three huge gas fields off its northwest coast: the Carnarvon, Browse and Bonaparte basins. On the east coast they also have significant reserves of coal seam gas (CSG), naturally occurring methane trapped by water deep underground that can be converted to LNG. Shell plans a CSG plant in Queensland expected to produce up to 16 million tons of LNG a year, with other energy giants such as Britain''s BG Group, ConocoPhillips, and Malaysia''s Petronas also developing projects in the area. Existing LNG fields in Malaysia and Indonesia were coming to the end of their operational life, creating a market for Australian gas.