* Mideast producers to free up more oil for exports
* Russia ties up long term supply contracts with China, to
start gas exports
* Asia invests in U.S., Canada LNG; Canada to send more oil
By Florence Tan and Meeyoung Cho
DAEGU, South Korea, Oct 17 Fast-growing oil and
gas producers Russia and North America are spending billions of
dollars on pipelines and port facilities to supply energy to
Asia, intent on grabbing a bigger share of the world's fastest
growing fuel market from Middle East suppliers.
China has driven global oil demand growth for a good part of
the past decade, galloping ahead of the United States as the
world's top net oil importer last month. The Asian superpower's
surge in consumption has kept prices supported despite a rise in
North American shale output and a weak economy in the West.
That pivot in growth away from the West has meant producers
such as Canada have had to look further from home to find a
market. At the same time, Russia, its Central Asian neighbours
and other exporters are also queuing up at Beijing's door to
sell their oil and gas.
"The centre of gravity shifting east is becoming a reality,"
Maria van der Hoeven, executive director of the International
Energy Agency told Reuters on the sidelines of the World Energy
Congress in South Korea.
"They (China) would like to get oil from everywhere. Whether
it's by ship or, let's not forget about Russia, by pipeline."
Net oil imports in the Asia-Pacific will rise to more than
25 million barrels per day (bpd) in 2035, close to current crude
output in the Middle East, the Asian Development Bank said,
giving a sense of the region's rising demand.
While Asia's market grows, the United States, which has been
for decades the world's biggest market for oil and gas, could
slash its oil imports by half by the end of 2020 from levels
seen two years ago due to the shale oil and gas boom and
improving energy efficiency, the IEA said.
Gas producers in North America and Asian buyers are working
on multi-billion dollar projects to liquefy the region's
abundant gas supply and ship the super-chilled fuel to the East.
North America has already pushed Australia out of the top
spot for new Asian investment in gas development, while several
pipeline projects are being planned in Canada to send landlocked
crude to Asia.
Pipeline operator TransCanada Corp is participating
in projects worth nearly C$14 billion ($13.5 billion) that aim
to fill Asia's fast-growing demand for Canadian oil and gas and
could build more, Chief Executive Russ Girling said.
"I would have never predicted that 24-36 months ago,"
Girling said in an interview earlier this week.
Russia, the world's largest gas producer, also plans to open
up liquefied natural gas (LNG) exports next year to meet growing
demand from Asia-Pacific markets. The government plans to submit
a bill in parliament on it soon.
That comes after Russian producer Rosneft signed
one of the biggest deals in the history of the global oil
industry in June - a $270 billion pact to supply 365 million
tonnes, or 300,000 bpd, of oil for 25 years.
That would come on top of the 300,000 bpd Rosneft is already
sending to China.
Middle East producers are competing hard among themselves
and with other suppliers for the Asian market.
Fast emerging as a key competitor to Saudi Arabia, Iraq said
China is seeking to increase purchases of its crude by more than
two-thirds next year, to 850,000 bpd. More requests for 2014
supply from China may come in, deputy prime minister for energy
Hussain Al-Shahristani said.
Top oil exporter Saudi Arabia, which increased its annual
capital budget ten-fold to $40 billion in the last 10 years,
will export more of better quality light crude by 2017 from two
fields - Shaybah and Khurais - while its giant Manifa field will
provide heavy crude supply.
The race is on for producers who can provide steady, large
volumes of oil to China as it may overtake the United States as
the world's largest crude importer by 2017, according to Wood
"OPEC's orientation is no longer a global diversified
market, it will continue to sell oil globally but it will
predominantly be selling oil to China," said William Durbin,
head of global markets research at Wood Mackenzie.