Asian, Middle Eastern gas producers told to cooperate

Asian, Middle Eastern gas producers told to cooperate

PATTAYA, Thailand (AP): Asian and Middle Eastern gas producers
should join hands to benefit from the growing market for gas fuel
in Asia, especially in China and India, a top official said
Monday.

Considering the potential size of these two markets,
competition among suppliers of liquefied natural gas, or LNG, has
been intense, said Mohamad Hasan Marican, president of Petronas,
Malaysia's state oil and gas company.

In the long run, such competition may be "detrimental to the
future growth of the industry," he said in a speech at the Gasex
2000 conference. The three-day conference, which began Monday,
has brought together more than 450 representatives of state-run
gas companies and national gas associations from 15 Asia-Pacific
countries.

"Perhaps the time has come for the Middle East and East Asia's
gas suppliers to explore a mutually beneficial trade-off or
cooperative competition to fully optimize the potentials that
could be derived from the rebirth of Asia's gas market - a win-
win solution to both producers and consumers," Mohamad said.

With petroleum prices having reached an all-time high, the
biannual conference is discussing ways to promote natural gas as
a cheaper and cleaner fuel for electricity generation, municipal
heating, cooking and transport.

China is among the most promising new markets in Asia, and its
demand for natural gas is expected to increase four times by 2010
to match or even outrank traditional buyers such as Japan, Taiwan
and South Korea.

The three countries together accounted for 37 percent of
natural gas consumed in the Asia-Pacific region in 1999,
according to statistics from the oil company, BP Amoco.

Delegates at the conference also are expected to discuss a
planned 27,000-kilometer (16,666-mile) natural gas pipeline
network connecting Southeast Asian nations with eastern Asia,
said Songkriet Tansamrit of the Petroleum Authority of Thailand,
the conference host.

The pipeline will transport natural gas from production fields
in Malaysia and Indonesia to consumer centers in China and
possibly Japan, Taiwan and South Korea. It is slated for
completion in 2010.

A theme likely to emerge at the conference is the development
of LNG as a tradable commodity, conference organizers said.

Generally, LNG contracts are negotiated for 25 to 30 years,
because of the heavy infrastructure and capital requirements
involved. End-user desire for more flexibility in the face of
demand fluctuation may lead to the development of a swap market
in LNG, officials say.

In a speech at the conference, Thai Industry Minister Suwat
Liptapanlop said his country is promoting the use of compressed
natural gas as a vehicle fuel, and trying it out on public
transportation as an initial step toward replacing petroleum
products.