Takeover, page-27

This shouldn't do any harm to the STO sp:
'ENERGY WE AUST 3Feb

Shell, Australia’s biggest LNG exporter, says there will be no LNG glut and that the oil giant will continue to invest in new projects. In good news for what is expected to become the nation’s second-biggest export after iron ore by the end of the decade, Shell chief Ben van Beurden said there was no sign of the looming LNG oversupply tipped by many analysts as new Australian and US supply ramped up.

“The LNG glut, it’s conspicuously absent, isn’t it? Much to the surprise of those who thought it was inevitable,” Mr van Beurden said. “Supply additions are so much more visible than incipient demand , which is invisible. We have a pretty good insight on this but it is somehow less transparent for market commentators to see coming.”

The future of LNG demand is hotly debated. Many industry sources expect there to be oversupply until early next decade, while Macquarie recently said it could last until 2027 if the US, Russia and Qatar build more projects. But China’s push to clean up its air has led to unexpected demand for gas to replace coal in recent months, pushing LNG spot prices to three-year highs of more than $US10 per million British thermal units. “There is not going to be a glut,” Mr van Beurden said.

He said Europe, which he called the market of last resort for LNG, was not being used for LNG sales because Asian demand was strong. “China is very strong when it comes to gas demand growth, even stronger when it comes to gas import growth and even stronger again when it comes to LNG demand,” he said. “I remain very optimistic about the fundamentals of LNG and therefore we will continue to see this as a very good opportunity to focus our efforts on and also to continue to invest in new supply projects.”