* Woodside to review 80 pct of LNG contracts in 2011-2014
* Woodside expects to secure higher LNG prices from reviews
* Sees tight LNG market between 2012 and 2016
MELBOURNE, May 28 (Reuters) - Woodside Petroleum expects the liquefied natural gas market to remain tight out to 2016 and expects to win higher prices for its LNG as it renegotiates contracts, Australia’s largest oil and gas company said on Monday.
Woodside recently started producing LNG from its $15 billion Pluto project, Australia’s first new LNG output in six years, and, alongside Angola LNG, the only new supply due to enter the market until 2014 or 2015.
The market has tightened sharply following the Fukushima nuclear disaster which has stoked Japan’s demand for gas for power plants, and the market could tighten further if new supplies do not come on line by 2015, the company said.
“Possible delays to Australian projects under construction will further exacerbate this period of tightness, and sellers with short-term volumes available between 2012 and 2015/16 will be well positioned to benefit,” Reinhardt Matisons, Woodside’s president of marketing, said in notes prepared for an investor briefing.
Woodside remains bullish on LNG prospects, even in the face of new competition from cheap North American LNG exports, with global LNG demand growth expected to average around 4 percent a year to 2025.
It is confident it will be able to snare new sales thanks to its existing customer ties in high-priced markets and its recent $2 billion sale of a 14.7 percent equity stake in the west Australian Browse project to Japan’s Mitsui & Co and Mitsubishi Corp (MiMi).
“There is strong competition between potential suppliers, however we believe that Woodside’s strengths in the market outweigh potential threats to our strategy,” Matisons said.
“The recently announced arrangement with MiMi for joint marketing of Browse volumes further strengthens Woodside’s position,” he said.
Woodside said growth in new and emerging Asia Pacific markets, including China and India, is expected to top 10 percent a year to 2025, citing forecasts from consultants Wood Mackenzie.
That growth is key to the company’s focus on trying to find ways to expand its Pluto project and develop the Browse and Sunrise LNG projects.
“Unmet demand in the 2018-2020 timeframe, when these projects are targeting startup, is projected to be between 65 and 80 million tonnes, with the majority of this in premium markets,” he said.
LNG prices in those markets are expected to remain linked to oil prices.
Woodside expects to compete against 40-50 million tonnes a year of LNG supply from North America by 2025.
The company has more than 15 long term contracts for LNG sales from the North West Shelf and Pluto. The company is due to review 80 percent of its contracts between 2011 and 2014.
It said it expected those contract reviews to result in higher prices, “due to the tightness of the market and the robust outlook for short, mid and long-term pricing.”