Accidents with lng should have little or no long term environmental damage, unlike nuclear with lingering radioactive contamination. Of course loss of any ship would be a blow to the company that owns it but not like the liability that nuclear plants face. jmho
SYDNEY—A global shift away from nuclear power in response to the atomic plant crisis unfolding in Japan will likely spur a scramble for Australian energy, catapulting the country ahead of Qatar as the world's biggest supplier of liquefied natural gas in the near future.
Japan's devastating earthquake and tsunami risk damaging the prospects of nuclear power for decades to come, as radiation leaks raise concerns over plant safety. Some governments, including those of Germany and Switzerland, have already signaled a willingness to review plans to make new nuclear reactors a cornerstone of their strategy to slow emissions growth. Australia's abundant reserves of natural gas could help fill any gaps that appear in the global energy mix following the events in Japan.
"The Japanese tragedy could lead to a setback for the world's nuclear renaissance—except perhaps in China—leaving gas as the fuel of 'no choice' in [Organization for Economic Cooperation and Development] countries, where voters might decide against the nuclear option," said Thierry Bros, energy analyst at Societe Generale in Paris.
Liquefied natural gas, or LNG, which is natural gas supercooled to liquid form and exported around the world on tankers, is less emissions-intensive than other fossil fuels, including coal. It is also cheaper to produce and more reliable than renewable energy such as solar power.
Australia has more than 100 million metric tons of annual LNG production capacity under construction or on the drawing board, of which just 45 million tons has been committed to buyers, according to calculations by Dow Jones Newswires. Japan, the world's biggest importer of LNG, accounts for 30% of contracted volumes from these new plants.
To be sure, Australia's LNG developments face several challenges of their own, and analysts expects several to be delayed or end up on the scrap heap. Australia's energy minister and company executives say the country's tight labor market is a particular concern, with the potential to raise costs sharply.
But nations competing with Australia to meet an increase in LNG demand face bigger hurdles to delivering new output quickly. Iran is struggling to secure vital LNG technology due to sanctions imposed by the U.S. because of Tehran's failure to halt its nuclear program. LNG plant expansions in Nigeria have been repeatedly delayed, in part due to instability in the West African country, while Qatar says it has no plans to expand its output capacity beyond its current 77 million tons of LNG.
Most of the new LNG demand globally is coming from North Asia, as the U.S. market for LNG virtually dried up in the last five years, when energy companies found ways to produce natural gas from shale rock formations more economically. Producing gas from shale rock is cheaper than importing LNG as it eliminates the costs of freight, import taxes and conversion of the liquid back to gas.
China and India have emerged as major buyers of LNG in the past two years, competing with Japan, South Korea and Taiwan, which together account for 55% of LNG demand.
Australia's advantage is grounded in its ability to supply LNG to North Asia more cheaply than other big LNG producers can ship. All of these North Asian countries rely on nuclear power for part of their energy mix, and have plans to build new reactors.
According to Asit Sen, an analyst at New York-based investment bank Madison Williams, the cost of shipping LNG from Australia to Japan and South Korea is 95 U.S. cents per million British thermal units of LNG. That is significantly lower than other regions such as the Middle East, where the cost is US$1.53, and Nigeria, where it's US$2.50, he says.
Royal Dutch Shell PLC executives said Tuesday they expect Japan's nuclear crisis to lead to higher LNG prices, as more cargoes of the fuel are diverted to Tokyo to make up the shortfall in its energy needs.
"New demand from Japan would be largely unexpected and could supply a new push to Australia's LNG projects yet to be sanctioned," says Xavier Grunauer, an analyst at Japanese investment bank Nomura.