Nuclear Power Worries Boost Standing of Australian LNG

SYDNEY-A global shift away from nuclear energy in response to the crisis develops nuclear power plant in Japan is likely to cause a power struggle for Australia, catapulting the country ahead of Qatar as the world's largest supplier of gas LNG in the near future.
Japan's devastating earthquake and tsunami risk of damaging the prospects of nuclear energy in coming decades, as radiation leaks raise concerns about plant safety. Some governments, including Germany and Switzerland, have already expressed their willingness to review plans for new nuclear reactors, the cornerstone of its strategy to curb emissions growth. Australia's abundant reserves of natural gas could help fill the gaps that appear in the world energy mix after the events in Japan.
"The Japanese tragedy could lead to a setback for the nuclear renaissance, except perhaps in China, leaving gas as the fuel of the 'other option [Organization for Economic Cooperation and Development] countries, where voters can decide against the nuclear option, "said Thierry Bros, energy analyst at Societe Generale in Paris.
The liquefied natural gas, or LNG, which is the super natural gas to liquid form and are exported around the world in tankers, is less greenhouse gas than other fossil fuels, including coal. It is also cheaper to produce and more reliable than renewable energy such as solar energy.
Australia has more than 100 million metric tons of annual production capacity of LNG under construction or on the drawing board, of which only 45 million tonnes is committed to buyers, according to calculations by Dow Jones Newswires. Japan, the world's largest importer of LNG, representing 30% of contracted volumes of these new plants.
Undoubtedly, the evolution of Australia LNG faces several challenges of their own, and analysts expect more to be delayed or terminated at the pile of junk. Minister of Australia, energy and company executives say the country's tight labor market is a particular concern with the potential to increase costs dramatically.
But nations that compete with Australia to meet increased demand for liquefied natural gas face major obstacles to the delivery of a new rapid exit. Iran is struggling to get vital LNG technology due to sanctions imposed by the U.S. due to lack of Tehran to halt its nuclear program. increases LNG plant in Nigeria have been repeatedly delayed, partly due to instability in the West African country, while Qatar said he had no plans to expand its production capacity beyond its current 77 million tonnes LNG.
Most of the demand for LNG worldwide is coming from northern Asia, and the U.S. LNG market virtually dried up over the past five years, when energy companies found a way to produce natural gas from shale rock formations more cheaply. Gas production from the shale rock is cheaper than importing LNG since it eliminates shipping costs, import taxes and the conversion of 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 represent 55% of the demand for LNG.
Australia's advantage lies in its ability to supply LNG to North Asia cheaper than other big producers of LNG can be shipped. All of these countries in northern Asia is nuclear energy as part of its energy mix, with plans to build new reactors.
According to Asit Sen, analyst with New York investment bank, Madison Williams, the cost of transporting LNG from Australia to Japan and South Korea is 95 U.S. cents per million British thermal units of liquefied natural gas. That is significantly less than other regions like the Middle East, where the cost is $ 1.53 U.S., and Nigeria, which is $ 2.50, he says.
Royal Dutch Shell PLC said Tuesday that executives hope that Japan's nuclear crisis to lead to higher prices for LNG as fuel loads are diverted to Tokyo to cover the deficit of its energy needs.
"The new demand from Japan would be largely unexpected and could provide a new impetus to Australia LNG projects not yet been punished," said Xavier Grunauer, an analyst at Japanese investment bank Nomura.