China’s Clean Air Quest to Drive LNG Investment: Santos
Santos’ head of liquefied natural gas markets, Peter Cleary, has pointed to Canada and Mozambique as Australia’s biggest competitors for new LNG investment, despite last week’s $US400 billion deal for China to import vast quantities of gas by pipeline from Russia.
Mr Cleary said the deal between Russia and China left plenty of scope for Australian LNG to compete in Asia, and in China, where pressure for better air was likely to drive stronger demand for gas than many expect. “China needs all solutions, not one solution, for its energy needs,” he told Fairfax Media before an address on Tuesday at an Asian LNG summit in Beijing.
He said the Russian deal would provide a “great chunk of gas” when the pipeline starts up late this decade, but “by then there will be plenty of users” demanding deliveries.
Mr Cleary, who is also vice-president, eastern Australia commercial, at Santos, said pressure was on Australia to match new LNG projects in North America and East Africa. He said brownfield expansion of the $188 billion wave of LNG plants under construction around Australia and floating LNG would both be important in that regard.
“Whilst we have invested heavily in this move from 25 million tonnes to 80 million tonnes [of LNG capacity in Australia] we’ve created great opportunity for brown-field expansion, and I think you’ll find we’ll be fast adapters to floating LNG, which will keep us cost-competitive,” he said. “It doesn’t mean we have got all the problems licked but we are a reliable supplier . . . and that counts for a lot in this market. So, I think, if we are able to be competitive with new projects then we should win our fair share.”
In his address, Mr Cleary says China should overtake South Korea as the world’s second-largest LNG buyer as early as 2017.
By 2020, China might be importing about 50 million tonnes of LNG, about a seventh of global demand.
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