Liquefied natural gas

worlds gas reserves occur in OECD countries. The reserves-to-production ratios indicate
that, at current levels of production, the Russian Federations reserves will last for the
next 73.5 years, and that Iran and Qatar each have reserves for more than 100 years.

3.2 Global LNG trade

The worlds first regular LNG trade commenced with Algerian exports to the United
Kingdom in the 1960s. In the 1970s, Indonesia commenced LNG exports to Japan
and South Korea. Since then, the LNG trade has evolved from distinct regional
markets in the Atlantic and Pacific basins towards a more global trade:
On the supply side, there have been many new entrants including
Australia, Malaysia, Nigeria, Qatar and Trinidad & Tobago. In 2007, Qatar was
the largest exporter of LNG, followed by Malaysia and Indonesia; and
Currently, Japan and Korea predominate as importers of LNG, accounting for
39.3% and 15.2% respectively of total imports in 2007, with import volumes
also going to the United States and Europe.2 The increasing energy requirements
of China and India will be of future significance to the global LNG trade.

3.3 Supplydemand equation

The International Energy Agency (IEA) estimates that from 2006 to 2011 global gas
demand will increase to 113 trillion cubic feet. This is equivalent to growth of 2.4%
per year. The IEA also notes the plateauing of gas production in OECD countries, yet
the increasing OECD import dependence on gas, particularly with strong OECD
investment in gas-fired power stations.
The LNG supplydemand equation is somewhat unbalanced at present. There is
strong demand for LNG, yet tight LNG supply due mainly to a bottleneck in the
development of liquefaction capacity. The tight supply situation is unlikely to be
significantly eased by the new liquefaction projects coming on stream in the near
term as most of the volumes are already committed (see table below).

Anticipated Project Capacity Location

commercial (million tonnes
operation date per annum)

3Q 2008 Qatargas II (first train)3 7.8mtpa Qatar

4Q 2008 North West Shelf Train 5 4.4mtpa Australia
Early 2009 Sakhalin II (two trains) 9.6mtpa Russia
Early 2009 Tangguh (two trains) 7.6mtpa Indonesia
Early 2009 Yemen LNG 6.7mtpa Yemen
1H 2010 Peru LNG 4.4mtpa Peru
Late 2010 Pluto LNG (first train) 4.8mtpa Australia

2 BP, Statistical Review of World Energy, June 2008, p 30.

3 Inclusive of this train, Qatar plans to increase its current output of approximately 31 million tonnes per
annum (mtpa) to 77mtpa by 2012.

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