_:n7ceea9096ae44dc788e3e92a6dde1665xb0
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"&lt;article&gt;&lt;p&gt;&lt;i&gt;The original headline said: &quot;Chevron sees 70mn t/yr shortfall by 2020&quot;; it should have said &quot;by 2025&quot;&lt;/i&gt;&lt;/p&gt;&lt;p&gt;An extra 70mn t/yr of new liquefaction capacity would be needed to meet expected LNG demand by 2025, Chevron chief executive John Watson said at the World Gas Conference in Paris today.&lt;/p&gt;&lt;p&gt;Around 50mn t/yr of brownfield export capacity in the US is under construction and it is likely that an additional 20mn t/yr of US capacity will be built, Watson said. &lt;/p&gt;&lt;p&gt;A further 80mn t/yr of liquefaction capacity is being built outside the US, but that leaves another 70mn t/yr that will need to be built to meet expected global demand of 440mn t/yr by 2025, Watson said. &quot;We need to start thinking about where that will come from,&quot; he said. &lt;/p&gt;&lt;p&gt;LNG and crude prices have fallen in the past year, which has resulted in some liquefaction projects being postponed.&lt;/p&gt;&lt;p&gt;US projects built on the location of existing import terminals have lower costs than greenfield projects, which increases their competitiveness. Greenfield projects in other countries have been put on hold as US brownfield projects have set a new price bar, Watson said.&lt;/p&gt;&lt;p&gt;It is tempting to defer the investment necessary for the next wave of LNG projects, Watson said. &quot;But we need to work now to ensure the next wave of LNG. This is going to be challenging because new greenfield projects cannot easily compete at low Henry [Hub gas] pricing. But the capital costs of US projects are unlikely to be the same over the world. Greenfield developers need to be creative,&quot; he said.&lt;/p&gt;&lt;p&gt;Watson advocated new approaches to developing the next wave of projects, such as buyers taking stakes in upstream infrastructure similar to Chevron&#39;s 15.6mn t/yr Gorgon plant in Australia. Chevron operates Gorgon and holds a 47.3pc stake in the project while Japanese utilities Osaka Gas, Tokyo Gas and Chubu Electric Power own 1.25pc, 1pc and 0.417pc, respectively. ExxonMobil and Shell own 25pc each.&lt;/p&gt;&lt;p&gt;The US may be called upon to develop not only the current wave of liquefaction projects but the next wave necessary to meet the additional 70mn t/yr of demand, Watson said. &lt;/p&gt;&lt;p&gt;&quot;The conditions were right for the US shale revolution,&quot; he said. This included well developed supporting infrastructure, a conducive regulatory system, and a liquid paper market that allowed producers and sellers to come together on price transparency, he said. &quot;Advancing the US market has helped develop a global LNG market. The forces for convergence in LNG markets will increase as US markets come on line.&quot;&lt;/p&gt;&lt;p&gt;Postponing projects in the short term could lead to liquefaction capacity growing slower than expected demand after projects currently under construction have been completed. This could leave the supply-demand balance tight resulting in a cycle of prices rising after lower prices discouraged investment.&lt;/p&gt;&lt;p&gt;The sharpest reduction in planned liquefaction capacity since the end of 2014 is from greenfield projects located in western Canada. These include Malaysian state-owned firm Petronas delaying taking a final investment decision on its 13mn t/yr Pacific Northwest project in British Columbia in December, Chevron slowing spending on its 10mn t/yr Kitimat LNG project, and Shell&#39;s LNG Canada project pushing back a final investment decision until 2016 at the earliest, having previously planned to take the decision this year.&lt;/p&gt;&lt;p&gt;kw/eb/dt&lt;/p&gt;&lt;p&gt;&lt;br&gt; Send comments to &lt;a href=&quot;mailto:feedback@argusmedia.com&quot; target=&quot;_parent&quot;&gt; feedback@argusmedia.com &lt;/a&gt;&lt;/p&gt;&lt;p&gt;&lt;u&gt;&lt;a href=&quot;http://www.argusmedia.com/Info/General/News&quot; target=&quot;_TOP&quot;&gt; Request more information &lt;/a&gt;&lt;/u&gt; about Argus&#39; energy and commodity news, data and analysis services. &lt;/p&gt;&lt;p&gt;&lt;i&gt; Copyright &#169; 2015 Argus Media Ltd - &lt;a href=&quot;http://www.argusmedia.com/&quot; target=&quot;_TOP&quot;&gt; www.argusmedia.com &lt;/a&gt; - All rights reserved. &lt;/i&gt;&lt;/p&gt;&lt;/article&gt;"
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