Shell targets Asian natural gas market
LNG likely to become main energy source
KUALA LUMPUR: Southeast Asia presents a huge opportunity for energy giant Royal Dutch Shell to cash in on the growing demand for natural gas, which is likely to become the world’s main source of energy by 2050.
Maarten Wetselaar, Shell’s executive vice-president for integrated gas, said natural gas is uniquely positioned to address challenges faced by policymakers to find competitive, affordable and sustainable energy.
‘‘The availability and affordability of renewables can be quite a challenge. People want their energy to be clean, convenient and cheap. You can’t have all three at the same time,’’ he said.
While renewable is the cleanest type of energy, coal is probably the cheapest. Nuclear, meanwhile, is convenient because there are no disruptions.
‘‘Gas is the biggest overlap with the three, and before the middle of the century it will be the dominant source of energy in the world,’’ he said.
Natural gas produces around half of greenhouse gas emissions. The shale gas revolution in the US has brought gas prices down to that of coal.
‘‘The quickest way to reduce CO2 is to switch from coal to gas-fired power plants, and this will make an evolution in any city,’’ said Mr Wetselaar, adding that governments must take strong action to stem the growth of emissions from coal-fired power generation.
According to leading energy consultancy group Wood Mackenzie, China and Southeast Asia will emerge as the major liquefied natural gas (LNG) markets by 2025, with over 50 million tonnes of demand coming from the latter. Out of the 50 million, around 13 million will come from Thailand, up from the estimates of 2.4 million tonnes by PTT Plc in imports this year.
LNG, which is natural gas in a liquid form that makes it easier to store and transport, seems to be the only fuel source that Thailand can count on, with coal imports and nuclear power development still facing strong protests from local communities.
Shell sold a record 20.2 million tonnes of LNG last year, up from 18.8 million in 2011, marking a 7% share in the global LNG market. According to its 2012 annual report, it expects around 80% of capital investment in 2013 for its upstream business to be for LNG exploration.
The company expects net capital investment of US$120-130 billion for 2012-2015, an increase of 10-20% compared with 2008-2011 levels.
Shell’s revenue for the first half of this year totalled $225.48 billion, down from 236.99 billion during the same period last year.
Income totalled $9.97 billion, compared to $12.94 billion last year.
Mr Wetselaar said Shell’s strategy will focus on upstream growth as natural gas is poised to play a more important role in global energy.
‘‘We expect to see global gas demand growing by over 60% from 2010 to 2030, and this presents a major opportunity for Shell. And as the cleanest burning fossil fuel, this is good news for the global community,’’ he told a Shell two-day summit in Malaysia.
He also pointed out that LNG becoming available makes it possible for governments to convert whole transportation systems to use gas.
‘‘We’ve had compressed natural gas (CNG), but the problem is that there’s only so much range you can get out of it. For trucking, shipping and trains, you can’t build big enough tanks for it to work. That’s where LNG comes in,’’ said Mr Wetselaar.