Asia LNG Market Big Enough for Gorgon and PNG, Oil Search Says

By Angela Macdonald-Smith

Feb. 24 (Bloomberg) -- Asia’s liquefied natural gas demand is sufficient to absorb volumes from both Chevron Corp.’s Gorgon venture in Australia and Exxon Mobil Corp.’s Papua New Guinea project, said Oil Search Ltd., a partner in the PNG venture.

Gorgon is “a credible other project” and both ventures are marketing LNG that should be available before 2015, Peter Botten, managing director of Port Moresby-based Oil Search, said today. Initial sales agreements for the $11 billion PNG LNG venture are due “in the near future,” he said.

“There’s enough space for us both to proceed, and that’s what our customer base is telling us as well,” Botten said on a conference call about the company’s earnings. “They are the two projects that are working the market and having fully engaged with the customer base, as far as our intelligence goes.”

Both Gorgon, which includes Exxon Mobil and Royal Dutch Shell Plc, and the PNG LNG venture have said they aim to give the go-ahead for their rival projects by the end of the year. Exxon, which has a stake in both, in December reaffirmed its forecast for 4 percent annual growth in LNG demand through 2030 even as the world’s biggest economies endure their first simultaneous recession since the end of World War II.

LNG buyers have become “much more cautious” since the middle of last year and have yet to commit to purchasing fuel from the PNG project, Botten said.

“There’s still significant demand for LNG in the 2014, 2015 timeframe,” he said, citing the low number of projects that have been approved for development in the past year.

The PNG venture is scheduled to start shipments in 2013 or 2014, while Gorgon may start up in 2014.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net.