How do you think the Australian gas industry is unique from/similar to other nations?

Australia has emerged as one of the world’s leading international gas plays with its continued development of offshore gas and the emergence of the onshore coal seam gas (CSG)-to-LNG sector.

With an open capital market and limited government intervention in the oil and gas industry, Australia has successfully attracted some of the industry’s largest players, and has been the bedrock for the development of new technologies like floating LNG, coal gasification, liquefaction and so on.

I believe Australia is set to become one of the leading LNG exporters, with the potential of even surpassing Qatar.

What are Australia’s strengths and weaknesses with respect to the gas industry?

Australia has a number of strengths that bode well for the development of the gas industry. In terms of location, Australia is strategically located to meet the burgeoning growth of the Asia Pacific market, and also the western part of Latin America. Besides that, Australia’s oil and gas sectors have become very bankable investment propositions and are popular amongst upstream investors due to the nation’s prolific resources, exploration potential, a ‘can-do’ business philosophy, stable political environment, and clearlydefined fiscal and taxation regimes.

However, in order to sustain the industry and for Australia to remain as an attractive investment destination for industry players, it is important that the Australian Government maintains a strong partnership with the industry and be receptive to the concerns of the investors.

The proposal to impose the Resource Super Profits Tax is a case in point.

How will the Japanese nuclear situation impact on global LNG supply and demand?

The Fukushima nuclear plant incident revealed how very difficult and complex it is to handle a major disaster in a nuclear power plant. It also showed the state of unpreparedness of the industry to deal with a nuclear disaster of such magnitude and scale. It is therefore not surprising that several countries have decided to halt all new and proposed nuclear power plants, with a few even considering exiting the nuclear option altogether.

With practically zero growth in new nuclear power plant capacity expected for a decade or two, and the anticipated growth in energy demand globally, new sources of energy will have to be found to meet the potential gap. It is very likely that in the immediate term this gap will be met by coal, natural gas and renewable energy.

However, increasing concerns over the harmful effect of coal-fired power plants on the environment will somewhat limit the growth of coal.

In light of such developments, there is a general consensus that for the foreseeable future, global demand for natural gas is expected to remain strong. This augurs well for the outlook of global LNG. Since the number of approved new LNG projects in the next decade is known to be quite limited, the world’s LNG supply therefore is expected to become tight.

What role do you see carbon pricing playing in the demand for natural gas?

Generally, IGU supports the goal of reducing global CO2 emissions to mitigate climate change. In an era where sustaining the global economic recovery is of fundamental importance, it is evident that we need to make sure that solutions to reduce CO2 emissions make economic sense too. Analysts commonly conclude that methane hydrates are 10 to 15 years away from contributing significantly to commercial natural gas supplies, although Japan has also announced that it intends to begin some pilot production as early as 2018.

Overall, IGU believes that, if there were a globally agreed mechanism to set a cost on CO2 emissions, either as a properly designed CO2 tax or a well run cap-andtrade scheme, then, globally this would result in a net increase in opportunities for natural gas. With a level playing field, natural gas technology will continue to be part of the best economic solution.

How do you see global LNG markets changing, and what are the impacts of these changes on Southeast Asian LNG production (including Australia)?

The global LNG markets have experienced dramatic changes in recent years with volumes doubling in the last five years. The market has also become more flexible with spot volumes accounting for 20 per cent of the LNG trade, especially from the Atlantic Basin, and this trend is set to continue. Due to the shale gas revolution in the United States, we have also seen significant changes in the gas market there, where LNG volumes that were previously destined for the US market have to be redirected to other markets.

New markets have emerged, notably in South America and the Middle East, which were not considered as potential LNG markets even six years ago.

In the near term, Southeast Asian countries are also expected to become LNG importers, due to the rapid rise in domestic gas demand. This includes current LNG exporters such as Indonesia and Malaysia. which will be importing LNG from as early as 2012.

In addition to this, two significant events in 2011 – the devastating earthquake in Japan and the political unrest in several Middle Eastern and North African countries – will together accelerate the arrival of a tight LNG market.

Indeed, I believe the impact of the Fukushima Daiichi nuclear crisis will have significantly positive implications for LNG demand in the future.

What is your message for companies operating within Australia and the Asia Pacific?

With the competing LNG developments in the region, there will be a severe strain on physical resources and skilled manpower. Companies may end up vying against themselves for contractors, materials and manpower, which may result in increased cost.

In addition, there will likely be ‘bottlenecks’ in managing the development schedules of the many proposed gas and LNG projects for the area, particularly during the design and construction phase. For example, a number of LNG projects in Australia have appointed the same contractor for the front-end engineering and design phase of their projects. Proper planning and management need to be in place to avoid potential timing conflicts.

What could the Australian gas industry learn from the global gas industry or specific countries?

Although Australia is way ahead in terms of CSG development, the potential for shale gas is still largely untapped. Preliminary assessment performed in 2010 on the country’s shale gas potential, suggests that Australia has in-place volumes of several hundreds of trillion cubic feet of shale gas, but each play will have quite discrete geological characteristics and commercial prospects. The exploitation of these shale gas deposits will largely depend on future economics, and also the potential future demand, for which a proper assessment will have to be made.

In addition, Australia can draw on some of the lessons from North America where there are concerns raised on the methane emissions during the extraction process and also issues relating to contamination of underground water. It is important for the gas industry to address these concerns to demonstrate our responsibility toward the environment and public health.

How should the gas industry be promoting itself to help grow gas usage?

I believe that the gas industry must come together and work as one in promoting and advocating for natural gas. Unfortunately, many people, especially the politicians and policy makers, are still not fully aware about the attributes of natural gas and the role it can play in addressing energy security and mitigating climate change. Greater effort has to be made to understand the misconceptions and concerns that stakeholders have about natural gas and address them specifically.

For example, in Europe there is a concern about access to natural gas supply. This should no longer be a concern as there are now more supply sources both through pipelines and LNG. Moreover, the global natural gas resource is vast and widely dispersed geographically. Infact, with unconventional gas resources, we have more than 250 years of current global consumption.

In IGU, we have adopted the following strategy in advocating for natural gas: - Develop fact based resources and comprehensive toolkit on the attributes of natural gas that can be used to share, inform and educate various stakeholders on natural gas. This is available in our website. - Develop regional strategies taking into account the specific needs and concerns in those regions. We have appointed Regional Coordinators to help us. - Work with other gas advocacy groups and organisations, sharing information and providing support in reinforcing the message. - Engage with governments, regulators, media and other multi-lateral agencies in addressing concerns and increase awareness on the benefits of natural gas. - Use all available channels (television, print, electronic, conference, forums, interviews) to communicate the gas message.

What do you see as the innovative areas of growth for natural gas?

I see innovation and research as important focus areas for the long term sustainability of the industry. The coverage should be all encompassing, covering the entire value chain from upstream exploration and production to the final utilisation or if you like, from well head to burner tip. We have made some significant strides on the supply side through innovations such as floating LNG, small scale LNG, biogas and unconventional gas extraction. More can be done, for example in decarbonising natural gas through CCS. On the demand side, we should focus on energy efficiency and new uses for natural gas, for example CHP, fuel cells etc.

In this connection, IGU organises the IGU Research Conference (IGRC) every three years, the next one will be the IGRC2011 in Seoul, Korea from 19-21 October 2011. The next conference, IGRC2014, will be in Copenhagen in 2014.

What kind of a relationship does Australia have with the International Gas Union?

Australia is member of IGU through the Australia Gas Industry Trust. A few of the members have been actively involved in the work of our technical committees, which cover studies related to the gas chain and other areas such as sustainability, strategy, gas markets, LNG and marketing. Australia has also been chosen to host the 18th LNG Conference and Exhibition in 2016. This is the world’s largest LNG conference, held once every three years, where IGU is one of the major organiser.

With the growing role of Australia in the gas industry, I hope to see a greater involvement of Australia in IGU in the future.

What will you be talking about at the Australia Gas Conference?

Australia is an important gas exporting country and is well positioned to supply the growing gas market in the Asia Pacific region. I will be providing a global overview of the energy situation, the challenges, strategic imperatives and role of natural gas and how Australia fits in to the overall energy landscape, with some emphasis on the regional context.

What are you most looking forward to about the conference?

This is the first time that IGU is hosting a major gas conference in Australia. I look forward to meet the participants, industry players, policy makers and the important stakeholders in the energy industry in Australia to talk about the important role of natural gas in meeting today’s energy challenges. Australia is a large country with vast resources. Except for Western Australia, the usage of natural gas for the rest of the country is still very low and I hope to see a policy direction towards greater use of natural gas and other cleaner forms of energy in the future.

Can you tell us a bit about the relationship between IGU/CWC and your partnership for LNG 17, WGC and World Shale?

During the Malaysian Presidency, we have been working with CWC on a number of major conferences. Of course, they are our Professional Conference Organiser (PCO) for the World Gas Conference in Kuala Lumpur from 4-8 June 2012, but we have also worked with CWC for the inaugural World Shale Conference in Dallas last year and have supported their LNG conference series, particularly in Asia Pacific. They are also working with our American colleagues to organise the LNG17 in April 2013. The Australia Gas Conference is a joint initiative between CWC and IGU.