Liquefied natural gas (LNG) projects are picking up steam and cultivating investor confidence. "With the structural changes in the U.S. and the U.K., you couldn't dream of a better home for it [LNG] because the infrastructure-the technology and the pipelines-is already in place," Douglas Rotenburg, president, global LNG, BP, said at the recent Cambridge Energy Research Associates conference in Houston. Ahmed Yousef Al-Khulaifi, commercial manager of Quatar Liquefied Gas Co., noted the growing importance of LNG projects worldwide. Quatar Gas II, the largest LNG project in the world, was just completed. "By 2010, the LNG supply is expected to double, and the Middle East is going to have to offer supply to both the East and West," Al-Khulaifi said. "And by 2015, the Middle East is expected to supply more than 30% of the world's LNG." Quatar is prepared to rise to the challenge, he said. It has the world's largest gas field with more than 900 trillion cubic feet of reserves; it has strong governmental support and solid partnerships with shareholders that know the business; and, at a cost of $1 billion, it has already developed the infrastructure it needs to run a fairly large LNG port. "Our technology will allow us to reach every gas market in the world and move us downstream in the value chain," Al-Khulaifi said. Rob Shepherd, vice president of ABN Amro Bank, said there are many risks with financing LNG projects. "The best we lenders can do in the end is get all of our money back. We don't share the upside of governments and sponsors." For political reasons, projects in newer countries may require support from export credit agencies or multilateral agencies, which will inevitably drag out the financing process, "but this will hopefully ease as lenders become more comfortable with the stability in these countries," Shepherd said. It can be challenging to place a value on uncontracted capacity. "But lenders should be able to accept commodity-price bases as they have done it in the oil markets, even with exotic crudes," he added.
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