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Bloomberg: Russia-China gas deals spell big trouble for Canadian LNG

PostedNovember 18, 2014 by in International
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Bloomberg- Russia-China gas deals could kill Canadian LNG

Vladimir Putin and Xi Jinping may be putting Canada’s LNG industry out of business before it’s even built

Read this Nov. 10 story from business news leader Bloomberg on the increased pressure deals between Russia and China for natural gas are placing on would-be LNG exporters – especially Canada. Based on these new market conditions, only one in 20 LNG projects planned for 2020 around the globe are likely to proceed.

Russia’s move to broaden its energy ties to China is clouding the outlook for natural gas export projects on the drawing board in the U.S., Canada and Australia.

Companies looking to approve liquefied natural gas plants in the next couple of years and start shipments at the end of the decade will probably experience delays, according to energy consultants Tri-Zen International Inc.

Gas-supply agreements between Russia, the world’s largest energy exporter, and China, the biggest consumer, are adding to pressure on projects that are already facing increasing competition, rising costs and the prospect of lower prices.

“It’s just bad news generally” for LNG around the world, said Peter Howard, president of the Canadian Energy Research Institute. “It’s going to get really crowded.”

China and Russia signed an initial gas accord two days ago, after a $400 billion deal earlier this year. The tie-up means that only one-in-20 proposed LNG projects targeting the 2020 market will be needed, while one-in-five seeking 2025 sales will be required, according to a Macquarie Group Ltd. report.

“It’s not good news for projects hoping to get to a final investment decision in the next year or two,” Tony Regan, a consultant at Singapore-based Tri-Zen, said today. “Those developers will need to think about the post 2020 market.”

Vulnerable Canadians

The export of new supplies to Asia increases the possibility of a glut in global energy markets by early next decade. Once deliveries begin, China would supplant Germany as Russia’s biggest gas market, even as relations have soured with the U.S. and Europe over the Ukraine crisis.

Multibillion-dollar projects led by companies including Royal Dutch Shell Plc, Petroliam Nasional Bhd., Chevron Corp. and Exxon Mobil Corp. (XOM) are among more than 20 proposals for LNG export that Canadian regulators have approved or are considering from the nation’s Pacific and Atlantic Coasts. Most Canadian projects are scheduled to begin after 2020.

“The Canadian ones are probably the most vulnerable,” Regan said by phone.

READ MORE: http://www.bloomberg.com/news/2014-11-11/russia-china-natural-gas-ties-seen-leading-to-lng-project-delays.html

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13 Comments


  1.  
    Cheryl Cameron

    This is good news indeed – and absolutely what you and Rafe have been predicting for years, Damien. The fact that Russia has that much conventional gas left (news to me) is also positive news for the environment – while providing a nail in the coffin for BC LNG.

    Meanwhile lets support DSF’s long overdue objective of getting our rights to a healthy environment enshrined in the Constitution, and give our misguided politicians some much-needed boundaries before they completely screw everything up.




  2.  
    nonconfidencevote

    Well Mr Harper can “Huff and Puff” against Putin’s foray’s into the Ukraine but Vlad does have the cheaper gas by far.
    And China doesnt care if it buys from the devil itself as long as it saves them money.




    •  
      Damien Gillis

      Indeed. Any intelligent person should be able to recognize this for what it is: the death knell for BC’s LNG industry…Russia is BY FAR the world’s biggest gas exporter and these deals will see it supplying China (our biggest potential customer) with massive gas supplies at $10-11/unit. At that price point, BC LNG CAN’T MAKE MONEY. That’s barely the break-even point. So why would any company spend $15-30 BILLION building infrastructure to export a product that can’t make money? The answer is IT WOULDN’T.




      •  
        nonconfidencevote

        I expect one of the major “players” to announce a pullout over the next few weeks……Christie will be unavailable for comment.




  3.  

    Forgive me but I can’t help observing that Damien and I along with a host of experts have seen this coming since the utterly and dangerous incompetent Christy Clark and her panting poodle Rich Coleman went into a swoon over LNG in the 2013 election.

    The “fracking” issue is, as Damien especially has told us, is getting bigger by the day as everyone save our woeful governments are understanding what is really happening.

    Today a news story tells us a town in Texas, Texas for goodness sake, has banned “fracking”.

    Now, if only the NDP could screw up a bit of courage, moral and political, and start being a real Opposition Party.




    •  
      Mot

      Rafe,
      It’s been my opinion/ contention that “Gordo’s 300 Lb Gorilla” has been the head of the BC Gov’t since Gordo’s Hawaiian Adventure, perhaps all along.

      Christie: Nothing more than media Cheerleader.

      Gorilla’s fave exit line:
      Slaps hand on table & sez: We’re Done Here!
      Unsubtle clue for Minions to Shit & Git.

      No hope until “The Minister of Everything” is gone.




      •  
        nonconfidencevote

        Yup, Rich pulls the strings.
        Christy’s the gullible airhead panting at every opportunity for a photo op. Nothing more.
        Which reminds me. Where’s her “obscenely over paid” lacky Pamela Martin hiding these days?




    •  
      nonconfidencevote

      One can only hope that Christie will pin all her ‘reputation” on LNG ……..
      ( eeirily like Glen Clark and his politically suicidal insistance that the “Fast Ferries” were a stroke of genius. Something BC Ferries is STILL paying for!)
      ………And she will go down in well deserved flames




  4.  
    Reinier

    At the rate Russia is fracking, canada may be one of the last few places on earth with a healthy environment (well before Harper got his hands on it) and maybe we can become the one nation on earth to put human health ahead of foreign investors.




    •  
      Damien Gillis

      You know what, Reinier – Russia has barely gotten into fracking yet. Most of this is coming from their absolutely massive conventional reserves (cheaper and safer to extract than fracking) – they have almost a quarter of the world’s conventional reserves. That said, they will get into fracking over time, you can bet.

      And what you say is true – Canada should take stock of the healthy environment it still enjoys in many places – compared to the rest of the planet. That doesn’t seem to be the policy direction of our current governments though…





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