Asian LNG customers seek early supply deals - BG

Tue Jul 26, 2011 10:13am EDT

* Demand boosted by nuclear backlash

* BG seeks to convert US LNG import terminal to export

LONDON, July 26 (Reuters) - British oil and gas company BG Group said liquefied natural gas (LNG) customers in the Asia-Pacific region were looking to negotiate long-term supply contracts earlier than planned as the market is expected to tighten.

"The overall picture is tightening and causing particularly Asia-Pacific customers to come back to the table somewhat earlier than planned in order to engage and start to consider the next tranches of long-term supply," said Sir Frank Chapman, BG Group chief executive, in a conference call on Tuesday presenting the company's second-quarter results.

LNG demand in Japan rose to a record high last month as utilities replace nuclear capacity lost after the March tsunami with higher gas burn in power stations. Demand in China also skyrocketed due to higher power production.[ID: nL3E7IM068]

The Japanese nuclear crisis also caused a backlash against atomic energy in some countries such as Germany, a trend that is expected to lift global demand for gas in power generation and tighten the market for LNG.

"The situation in Japan has not affected significantly our trading. It's not the cause of this year's overarching LNG performance, but it has made the environment in which we're working somewhat tighter," Chapman said.

BG Group's second-quarter LNG exports to Asia rose over 40 percent to 20 cargoes, while exports to the U.S. fell over 60 percent to eight cargoes.

The company expects full-year operating profit from its LNG division to rise towards the $2.2 billion mark, after the division's second-quarter profits rose 2 percent to $553 million.

U.S. gas imports have dropped significantly over the past years as the exploration of shale gas deposits has swamped the market.

BG Group is involved in turning an LNG import terminal in the United States into an export facility to send out up to 15 million tonnes of LNG per year.

BG Group and the owner of the Lake Charles import terminal in Louisiana have not yet made a formal investment decision, but the parties have filed an application for the project to the U.S. Department of Energy, BG said on Tuesday. (Reporting by Karolin Schaps, editing by Jane Baird)

Related Quotes and News

Company
Price
Related News
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.