Lessons Learned When the World's Top LNG Companies Met: Day 2

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  • Gas producers are considering stakes in pipes to power plants
  • LNG buyers need to value security over price: Petronas CEO

At the LNG 18 Conference in Perth, Australia, attendees heard Wednesday how major energy producers are seeking to convert historical oil demand into liquefied natural gas sales through expansion into downstream markets. Suppliers including Total SA also called for carbon pricing and said some Asian utilities have shifted to coal from natural gas despite the United Nation’s COP21 agreement last year in Paris that encourages nations burn cleaner fuels. As Day 3 of the conference starts, here’s a taste of what the energy giants had to say on Day 2.

Downstream isn’t a dirty word

Companies including Total, Royal Dutch Shell Plc, and Woodside Petroleum Ltd. are pushing further downstream and looking at taking stakes in pipelines, regasification terminals and power plants. U.S. exporter Cheniere Energy Inc. is working with a consortium of companies to develop an LNG-fueled power project in Chile. Shell said that converting the world’s ships and vehicles to run on LNG would require nearly triple the total sales of the fuel last year.

Flexibility needed

LNG producers must adapt to changing markets and smaller-scale projects may better match demand, said Meg Gentle, Cheniere Energy’s president of marketing. About half of LNG volumes could be sold on a short-term or spot basis by 2020, and contracts coming up for renegotiation may account for about 100 million tons of annual supply, she said.

Play by the rules

Total, Europe’s second-largest energy company, said some Asian utilities are shifting from gas to coal for power generation and that the change is contrary to the spirit of last year’s international climate-change agreement known as COP21 that encourages nations to shift to cleaner energy. The company’s CEO Patrick Pouyanne said a carbon pricing mechanism is needed.

Security over price

Petronas CEO Wan Zulkiflee Wan Ariffin said customers should value security of supply over price and he will be pushing for more meaningful dialogue with buyers. Even as prices falter for LNG, the head of Malaysia’s state oil company said he was a firm believer in the future of the market.