LNG talks in Japan good news for Shell

Business Asia, July 5, 1999

The outlook for the liquefied natural gas (LNG) market in Japan is starting to improve, according to Shell Development Australia chairman Mr Roland Williams.

A recent visit to Japan is at the heart of Shell's renewed optimism in the industry.

Mr Williams said he had spoken to eight customers in Japan several weeks ago and found increasing confidence compared to the same period a year ago.

"I confidently believe we will have at least one train of business assembled for the North West Shelf expansion this year," he said.

The North West Shelf joint venture had planned a two-train 7.5-million-tonne LNG expansion, adding to its existing three-train project which mainly supplies the Japanese market.

However, weak market conditions have put expansion on hold.

Mr Williams earlier told the South East Asia Australia Offshore Conference in Darwin that Asian customers were showing an increasing willingness to talk about possible forward demand.

"There is no doubt improvement is taking place," he said. "The market seems to be returning, but I emphasise there is no room for euphoria."

Mr Williams said the next expansion of Australian LNG capacity would be at the North West Shelf, ahead of other greenfield projects such as the North Australian Gas Venture in which Shell and Woodside Petroleum are equal partners.

"The most economic source of the next increment of Australian LNG is a brownfield expansion at Karratha because the infrastructure is all there," he said. "There is probably a A$2 billion advantage there."

Equal partners in the North West Shelf are Woodside, the Australian Royal Dutch/Shell unit, BHP, British Amoco, Japan Australia LNG (MiMi) and Chevron Corp.