Opportunities in Liquefied Natural Gas

Demand for natural gas is expected to increase worldwide, especially in the growing economies of the Far East. Much of the expected new demand will be for electric power generation. Natural gas burns more cleanly than petroleum fuels or coal, and new gas-fired combined-cycle turbine power plants can turn heat into electricity more efficiently than other fossil fuels. The major consumers of natural gas in the Far East (Japan, South Korea, and Taiwan) are separated by oceans from the main producers (Indonesia, Malaysia, and Australia), generating an active maritime trade in liquefied natural gas (LNG). This transport requirement means that exploration and development of natural gas in the Far East is often just the first step in a complex, vertically integrated project. The natural gas provider must build a liquefaction plant, order ships and often build a harbor. At the receiving end, the provider might also build the port and re-gasification plant, and the electric power plant that will burn the natural gas.

Despite these complexities, some major U.S. companies find LNG projects attractive investment targets. Mobil has a new joint venture with Pertamina, Indonesia's state energy company. Shell has projects in Malaysia, Oman and Nigeria. In 1994, Exxon signed a joint venture with Pertamina in a project to develop an offshore gas field in the South China sea. The project would be the largest offshore natural gas development project in the world. In 1994, Enron and Qatar agreed to develop a massive new LNG project aimed at the Israeli and Indian markets. Outside Asia, Amoco signed a joint venture with British Gas, Cabot, and the Trinidad national gas company to develop a new LNG plant in Trinidad.

File last modified: November 5, 1997

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