Canadian LNG Exports: Asia Seeking LNG

canadian lng exportsCanadian LNG Exports: Asian Buyers Seeking LNG

Liquid Natural Gas, or LNG, has seen a sharp rise in consumption in recent years. With Canadian gas deposits considered to be the largest in the world, most developed and developing nations are in the bid to secure the LNG from Canada for a cheaper price. Due to countries like China and India going through a period of booming development, as well as the recent need for energy after the Fukushima nuclear disaster, Asia has the largest demand for LNG. Therefore, the race to secure cheaper Canadian gas deposits is at the top of Asia’s agenda.

Rapid Development in India and China

Currently, India and China are the most rapidly developing countries, resulting in an insatiable demand for energy to drive the countries and their industries. Both countries mainly use LNG for domestic cooking and heating purposes. However, in India, a new source of demand has been noted in recent years.

With the government stepping up on environmental pollution, many vehicles are being converted to use liquid natural gas. This demand is spiking the countries need to secure the gas at lowered prices. LNG being used in the automobile industry, coupled with domestic use, has resulted in huge demand for a new supplier. This has prompted India to be among the biggest contenders in looking to secure Canadian gas contracts.

The Recent Nuclear Disaster and Energy Shortage in Japan

Japan has been driven by nuclear energy for several decades, with the country rarely considering importing or using other forms of energy or fuel. The recent Fukushima nuclear disaster resulted in the closure of all nuclear energy plants in Japan, which has literally ground the country to a halt. However, industrial development, manufacturing and consumer electrical consumption hasn’t abated; so they have resorted to using other forms of energy, one being LNG. This has also brought Japan in to the competition to secure LNG supply contracts from Canada. As they are facing an extreme energy shortage, they have been aggressively trying to negotiate Canadian gas contracts.

Group Purchasing Power

Since it’s clear that Asian countries show the highest interest in Canadian gas, it’s important that the involved nations consider taking a different approach towards securing the LNG contracts. Rather than scrambling to secure individual contracts, it may be worthwhile to approach negotiating the contracts as a purchasing group. Thus, allowing them to bargain for LNG contracts as a group, cutting off competition amongst themselves and ensuring they both get the LNG contracts for the same price and equal quantity.

As the gas reserves are found in BC, the money involved in the projects is huge. This would be considered the largest spend in the history of British Columbia for its natural resource. The prospect of billions of dollars in investments, high paying jobs and the potential of erasing government debt, has made this a high profile issue for the province.