Suez Exec: LNG Supply Will Be Key to Success in Import Business, NGI Reports

Business Wire, Feb 15, 2006

DULLES, VA -- The world is going to be short natural gas liquefaction capacity for at least a few more years, and that will put stress on the fast growing regasification business in the United States and elsewhere, Clay Harris, CEO of Suez LNG North America, the second largest importer of LNG into the United States, told Natural Gas Intelligence.

The LNG supply shortage could last through 2010, Harris said. "The big LNG projects in the Middle East (Qatar, in particular) will be in service by then with potential expansions on stream in Nigeria," he said.

"Trinidad is more of a developing story. Just a few days ago (Prime Minister Patrick) Manning announced that their intention is to build two more LNG trains, one utilizing gas from Venezuela and another utilizing indigenous gas. Whether there are enough gas resources in Trinidad to do another LNG expansion and a long list of domestic gas supply/demand projects that they are promoting is the question," the Suez executive said.

"But when these Qatar projects come on stream, the Nigerian expansions are on and Egypt is up and running, it will be a close race with Trinidad for top LNG supplier to North America." That's when prices may start to come down, he said.

Suez Energy North America has agreements for flowing supply with Atlantic LNG in Trinidad and Sonatrach in Algeria. It also has a deal for future LNG supply with Yemen and is negotiating for supply from Qatar and West Africa.

But, aside from a few spot cargoes over the next two years, Suez Energy NA, the operator of the LNG import terminal in Everett, MA, expects to see no increase in the number of LNG shipments that it brings to North America until at least 2008 due to a number of limitations both on the supply and delivery ends of the LNG chain.

The company had 99 LNG cargoes come to North America in 2005, including 69 (about 210 Bcf) to the Everett terminal near Boston and 30 to most of the other North American terminals, including to EcoElectrica in Puerto Rico, Cove Point in Maryland through a subcontract with Statoil, Lake Charles in Louisiana and Elba Island in Georgia.

Suez's vision is to create a big arbitrage LNG play in the Atlantic Basin, company officials said in a recent briefing for reporters. To an extent, the company already has done that by negotiating swap deals with Gas Natural in Spain that cut millions of dollars of transportation costs by swapping LNG from Algeria with LNG from Trinidad.

Going forward, Suez NA has proposed an additional terminal to supplement Everett, which has no extra space for an expansion, and one off the Atlantic coast of Florida. Both are in competition with other proposed projects and both would be offshore terminals using specialized ships that regasify the LNG onboard and deliver it into an offshore pipeline.

Harris will be discussing LNG issues at the GasMart conference and trade show in Denver May 3-5, hosted by Intelligence Press. FERC Chairman Joseph Kelliher will be keynoting the conference, and Questar Chairman Keith Rattie, Kinder Morgan Natural Gas Pipelines President Scott Parker and veteran Houston analyst John Olson will be among those making presentations (see http://gasmart.com/). Sponsors include the New York Mercantile Exchange, the InterContinentalExchange and the Natural Gas Exchange.

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Check www.gasmart.com for 2006 program updates or to register. A few sponsorships opportunities are still available. Call 800-427-5747 or email gasmart@gasmart.com.