UPDATE: US Likely To Limit LNG Exports To Keep Low Gas Price
May 03 2012 - 10:09AM
Dow Jones News
The U.S. government is likely to impose limits on exports of
liquefied natural gas in order to keep its domestic natural gas
prices low, said executives from two major oil companies with
operations in the country Thursday.
This means that European natural gas prices are likely to remain
much higher than those in the U.S. for years to come, with negative
implications for the competitiveness of European industry, they
said.
Natural gas prices in the U.S. have fallen to 10-year lows
because of a boom in production of gas trapped in shale rock. The
U.S. government "wants to keep this surplus to keep the price
down," in the long term, said Christophe de Margerie, chief
executive of France's Total SA (TOT), at the Petrostrategies
conference in Paris.
Several companies are planning to build plants that would
convert some of this domestic surplus of gas into LNG that could be
shipped internationally.
It isn't official policy, but the U.S. Department of Energy
"will limit exports to keep pressure downwards [on natural gas
prices] in the U.S.," said de Margerie. European gas prices are
therefore likely to remain at a significant premium to those in the
U.S., he said.
This could benefit U.S. industry because "low prices for natural
gas offer manufacturers a powerful competitive advantage," said
Mark Williams, the downstream director for energy giant Royal Dutch
Shell PLC (RDSB).
If natural gas prices remain cheap in North America, and oil
prices remain high, this does mean there is a great opportunity for
natural gas to gain market share in the transport sector, Williams
said.
"Liquefied natural gas offers great potential as a transport
fuel," he said. Shell plans to build a network of LNG refuelling
stations for trucks across Canada, he said. It is also looking at
sites in Texas and Louisiana where it could build facilities that
would chemically convert natural gas into diesel, Williams
said.
Both projects would be major multi-year investments and require
new infrastructure, he said. For this reason, it is hard to predict
how big a role natural gas will play in North American road
transport, he said.
-By James Herron, Dow Jones Newswires;
james.herron@dowjones.com, +44 207 842 9317
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