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Singapore: Delays in liquefied natural gas ventures led by ExxonMobil and Chevron may pare global supplies by 100 million metric tonnes, more than the annual demand of South Korea and Japan, the world's biggest importers.
Projects in Australia, Nigeria, Algeria and the Baltics have been shelved or postponed, prompting the capacity shortfall by 2013, said Ian Angell, vice-president of gas and power at Wood Mackenzie Consultants. The deficit, enough to power 250 million homes, will cause spot LNG prices to trade at parity or at a premium to oil, he said.
Prices of the fuel have increased sevenfold in the last five years to a record $20 per million British thermal units while the rate of project approvals last year missed forecasts, adding to concern supply will be insufficient to meet demand.
Global LNG trade rose 7.3 per cent last year, outpacing crude oil's 1.2 per cent, according to the BP Statistical Review of World Energy June 2008.
"There's an increasingly higher linkage between LNG prices and oil prices given the overall shortage in Asia,'' Angell, 46, said in an interview with Bloom-berg television yesterday. "The reduction in scheduled capacity is really impacting the supply side.''
Projects from Australia to Nigeria may have produced about 88 million tonnes in the first six months of 2008, Andy Flower, an industry consultant and a former executive at BP's LNG business, said on August 18. He expects output to rise by 14 per cent or about 25 million tonnes next year.
Demand for alternative fuels such as LNG and coal will continue to rise amid a slowdown in global econ-omic growth because both are used by power generators with a longer planning horizon, Angell said.
Asian coal prices have more than doubled this year to records on rising consumption and railroad and port bottlenecks in Australia and South Africa, the world's biggest suppliers.
"Power decisions are being made in Asia not by one-year or two-year growth projections but long-term projections, which remain robust in China, Vietnam and other countries in Asia,'' Angell said.
Demand for spot LNG cargoes has climbed in Japan after the shutdown of the world's biggest nuclear-fired power plant last July, Angell said.
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