North American Liquefied Natural Gas (LNG) producers are unable to supply Asian demand, Reuters reveals

LNG projects have been underway both in the U.S. and Canada. Cheniere Energy Inc’s Sabine Pass, the first North American export terminal, is expected to be operational by 2015, while a U.S. Golf Coast LNG project became officially underway last month. Malaysian energy company Petronas is also set to make an investment decision on it’s Canada LNG project in the coming months.

Impetus for Asian LNG demand came in the wake of the Fukushima nuclear disaster in March 2011. However, delays have stalled urgency in North America, BG group pushed their deadline back to 2017, and Petronas may delay the deal to 2017 for tax reasons, “In Canada, there’s a lot of waiting … it’s slow, no hurry like China.” says the Senior Economist with the CNOOC Energy Economics Institute Chen Wei Dong.

Delays have also affected enthusiasm among the Asian markets; “A few years ago, there was a kind of enthusiasm that U.S. LNG would solve everything, that is the Captain America’ story” said Ken Koyama, chief economist at Japan’s institute of energy and economics.

Hoe-Wai Cheong, Executive Vice President at Black and Veatch Corp, agrees; “ There’s a lot of gas reserves in Canada and the U.S…but if you look at the pace by which that’s coming out and the amount of gas that will ultimately be exported, I don’t believe it will have a significant impact on the global LNG pricing”

Global LNG To Fuel Asian Demand?

Although the number of LNG projects is projected to rise to 350 million by 2025, many of these projects have other destinations closer to home; “ It’s probably a misconception that U.S. LNG is all going to Asia…If you look at the companies involved in certain projects, such as Corpus Christi, it’s predominantly European utilities.” Explains Wood Mackenzie analyst Nicholas Browne.

Shipping is a problem for U.S. companies, however even Canadian companies with a shorter distance to the Asian markets have to wrestle with pipeline and liquefaction infrastructure costs and the concerns of local communities, “If the fundamental economics do not work, these projects will not happen,” believes BMO Capital Market Managing Director Aaron Engen.

In 2013 240 million tonnes of LNG deliveries took place, with continued growth in the Asian and Latin American LNG markets, reveals BG Group