Shell Seeks to Boost LNG Demand as Canada in Mix for New Plant

(Bloomberg) -- Europe’s biggest energy company is investing in projects to boost global gas demand and aims to continue feeding the market it’s nurturing with new liquefied natural gas export plants, including potentially in Canada.

Royal Dutch Shell Plc is supporting the development of gas use in heavy transport such as shipping and is also helping smaller and less creditworthy customers begin importing LNG, Maarten Wetselaar, the company’s director of integrated gas and new energies, said at an event at Bloomberg’s Sydney office Wednesday. As new LNG customers enter the market, that will open a window for Shell and others to develop new low-cost export plants.

“I want to create shorts that we can build projects against,” Wetselaar said. “As we develop the market, we’ll need new supply. We will build new LNG projects to serve that market, but as for where, I would be wrong to tell you.”

Shell has potential LNG projects all over the world, and the one that can produce the cheapest fuel will get the investment go-ahead, Wetselaar said. Canada is among the options, he said later in an interview with Bloomberg Television.

Wetselaar and other Shell executives, including Chief Executive Officer Ben van Beurden, have spent the past few years remaking Europe’s biggest oil company into a natural gas giant to thrive amid the global drive to lower carbon emissions.

First came the $52 billion acquisition of BG Group Plc last year, which added gas deposits from Kazakhstan to Australia. In March, it sold Canadian oil sands acreage to Canadian Natural Resources Ltd. for $7.25 billion, ridding itself of 1.7 billion barrels of crude reserves. The company had 6.26 billion barrels of oil and other liquids and about 6.99 billion of gas reserves at the end of 2016, according to its most recent annual report.

Australia Gas

As well as accelerating the transition to gas, Van Beurden has advocated a price on carbon and worked to promote hydrogen as a transport fuel.

Australia, where Wetselaar said Shell has invested $50 billion, is also becoming a gas behemoth, with a spate of projects set to come online over the next few years that may make the country the world’s largest LNG exporter as early as2019. Even as those projects have been coming online, the country has at times found the fuel to be in scarce supply for domestic use.

As concern mounts that LNG exports to nations such as Japan and South Korea have contributed to a tripling in Australia’s wholesale gas spot price in the past two years, Prime Minister Malcolm Turnbull’s government announced in April that it would restrict exports if there’s a shortfall for Australian customers.

Shell’s Australia Chairman Zoe Yujnovich told the same Bloomberg event Wednesday that the energy market operator would likely say later this month that the nation’s east coast faces a gas shortfall this year.

To contact the reporters on this story: Perry Williams in Sydney at pwilliams113@bloomberg.net, Dan Murtaugh in Singapore at dmurtaugh@bloomberg.net, Yvonne Man in Seoul at yman9@bloomberg.net.

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Edward Johnson