Birol notes that by 2015, the United States will overtake Russia as the world’s biggest natural gas producer. In the past four years alone, he said, U.S. natural gas production increased by an amount equal to total Russian exports today.
That isn’t stopping enormous wagers on LNG export terminals around the world. Chevron is the lead partner on three mega-projects in Australia. Exxon Mobil has an LNG project in Papua New Guinea whose cost estimate recently ballooned to $19 billion. BP is launching a $12 billion expansion of an Indonesia project targeted at Korean and Japanese customers.
Will they succeed or become white elephants? No one forecast the economic crisis in Europe or the tsunami or the surge in U.S. shale gas supplies. And then there’s China, whose substantial shale formations are still waiting to be unlocked.
‘Nobody saw it coming’
To get an idea of how abruptly assumptions have changed in a decade, consider the decision by Chevron and France’s Total Gas and Power to back LNG imports at Cheniere’s terminal at Sabine Pass. Each of the two oil giants guaranteed it would pay to import natural gas. Without the contracts, Cheniere would not have been able to raise the money needed to build the import facility.
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