Australian liquefied natural gas companies should not delay in preparations to win contracts on the west coast of North America, with deals worth tens of billions of dollars available, according to Federal Resources Minister Ian Macfarlane.
Australian liquefied natural gas companies should not delay in preparations to win contracts on the west coast of North America, with deals worth tens of billions of dollars available, according to Federal Resources Minister Ian Macfarlane.
Mr Macfarlane said his belief in the region’s potential had been reinforced after meetings with several key government officials during a recent tour of California and Mexico.
“The opportunity is there and potential gas sales of $50 billion or more over 25-year contract are very much alive,” he told WA Business News.
Mr Macfarlane said Mexican Energy Secretary Fernando Elizondo Barragan had detailed exciting prospects of his country’s future energy demand and they had signed a 10-year memorandum of understanding to cooperate on energy issues.
In Los Angeles, Californian Secretary for Resources Mike Chrisman told the minister how for the first time the Californian administration had decided LNG importation was essential.
Mr Macfarlane said Mexico’s demand for energy was growing at about 8 per cent annually, and potential LNG demand could eventually amount to 30 million tonnes per annum, three times what Australia is currently exporting to Japan and, potentially, China.
California’s traditional LNG reserves are shrinking and there is a move towards cleaner energy sources.
Most major international oil and gas companies have been aware of the huge market potential for some time and have been trying to establish LNG receival terminals in Mexico and California.
While there has been some delay to terminal plans in California because of environmental and security concerns, plans for Mexican terminals are more advanced.
Already San Diego-based Sempre Energy’s LNG receival terminal in Baja California, Mexico (to be completed by 2008), has awarded Shell’s Sahaklin project in Russia and BP’s Indonesian-based Tengu project initial supply contracts.
However, Mr Macfarlane said there remained strong indications that Australian gas was wanted and specifically pointed to the large Gorgon project on WA’s Barrow Island, where a final investment decision is yet to be made by the partners.
Shell are looking to take Gorgon gas through the Sempre site and ChevronTexaco’s proposed Mexican terminal recently received the last of major Mexican approvals.
Mr Macfarlane said it was imperative a decision was made on Gorgon so that Chevron could proceed with its terminal construction.
“I would expect to see a decision made in the next six months by the partners,” he said
In the US, Mr Macfarlane said the statements by Mr Chrisman were unprecedented.
“It was the first public acknowledgement by the administration that California needs to import LNG from overseas,” he said.
“It was certainly seen by us and some of the Australian resource companies present [BHPB, Woodside, ChevronTexaco, Exxon and Shell] as a signal that the administration was committed to moving forward on the issue.
Mr Macfarlane said Mr Chrisman emphasised companies shouldn’t be alarmed by the regulatory processes applied to import applications.
