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LNG Demand May Turn Australia Into `Qatar of the Pacific,' Bernstein Says

Australian liquefied natural gas projects are poised to benefit from surging demand in Asian markets, making the country the “Qatar of the Pacific” in the next decade, research firm Sanford C. Bernstein said.

China, India, Thailand and Singapore are set to drive consumption of the fuel, along with nations in the Middle East and South America, and supply is likely to grow slowly, Neil Beveridge, a Bernstein analyst in Hong Kong, wrote in a report today. Australia will account for about 60 percent of new global LNG production capacity added in the next five years, he said.

“While a slower economic recovery and large overhang of global LNG capacity may leave some investors feeling cautious on LNG, we remain bullish,” Beveridge said. Even as an increase in “unconventional” gas production in China and Europe may pose a threat to projects, “it will still be some time before this new source of gas makes its presence felt in the supply mix.”

Australia is likely to challenge Qatar as the world’s largest LNG exporter, according to Beveridge. Worldwide LNG consumption may increase to 300 million metric tons a year in 2015 from 180 million tons in 2009, he said in his report.

“This makes the market window for the start up of new projects in 2014-2015 attractive in our view and strongly supports our positive outlook on Australian LNG.”

Woodside, BG

Coal-seam gas-to-LNG projects proposed by BG Group Plc and Santos Ltd. in Queensland state and the Pluto LNG expansion planned by Woodside Petroleum Ltd. in Western Australia will likely be the next to gain approvals from the companies, he said.

“Expanding energy demand creates a great opportunity for Australia’s natural gas industry,” Matthew Doman, a Santos spokesman in Adelaide, said by phone. “In terms of the size of our resources and proximity to the market and given our track record of delivery, Australia is very well placed.”

Mark Todd, a spokesman for BG’s Australian unit in Brisbane, referred questions to the parent company’s headquarters in Reading, England. Roger Martin, a spokesman for Woodside in Perth, declined in an e-mail to comment on the report.

“Strong” growth is expected in China, where LNG demand may reach 46 million tons a year in 2020, Wood Mackenzie Consultants Ltd. said yesterday. That compared with its prior estimate of 31 million tons a year. Even so, some suppliers may have limited opportunity to obtain customers in China because of an increase in domestic development of unconventional gas found in rocks and coalfields, according to the report.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

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