Russia's Gazprom, the world's largest natural gas producer, is stepping up operations in Asia to grab trade opportunities as rising energy demand in regional giants China and India swells the gap between appetite and output.
Gazprom set up its first Asia-Pacific commercial office in Singapore a year ago and sells one or two spot LNG cargoes in the region each month. It aims to trade a total of 2 million tonnes of the super-cooled gas, matching last year's volume.
Asia "is different from anywhere else. The long-term supply and demand don't match and that's where the opportunities are," Arthur Tait, president and managing director of Gazprom Marketing and Trading Singapore, told Reuters in an interview.
"The potential in Australia is enormous, but I don't expect all of (LNG projects) to come onstream." Rising LNG output from countries such as Australia may fall short of an estimated demand of 40 million tonnes from China and India by 2016, creating opportunities for spot trade between producers in the Middle East and Asia, analysts say.
Gazprom holds Russia's gas export monopoly and produced 549.7 billion cubic metres (BCM) of natural gas in 2008, or 17 percent of global production. It expects export revenues to rise to $72.4 billion this year, exceeding the 2008 record, Gazprom executives said last month. The firm entered Asia's swiftly growing markets after exports to European Union customers fell, Russian Deputy Prime Minister Igor Sechin told Reuters last year.
It usually supplies a quarter of the European Union's gas needs but exports tumbled in 2009. The company is increasing its presence when a dozen global players, from oil majors Shell and BP to major lenders such as Citibank, have set up teams in the city-state in the past three years to tap the surge in trade. "It will get more competitive, but we are equally good at it," Tait said of growing competition in the regional LNG trading market. "We try to do things in advance of the game."
Most of Gazprom Singapore's spot deliveries of LNG go to Japan, Korea, China and Taiwan, Tait said. It has also doubled its fleet of liquefied natural gas carriers (LNG) to four taken on long-term charter, and plans a further increase in the coming year. The trader is not ignoring the traditional method of securing long-term deals - which account for more than 80 percent of global LNG sales, and has signed two such contracts in the past year. Tait did not reveal the customers' names. In Singapore, Gazprom plans to grow its staff to 55 by July, from 33-34 now, across products ranging from crude oil and liquefied petroleum gas to forex and carbon trading.
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