JOHANNESBURG (miningweekly.com) – Australian oil and gas major Woodside Petroleum expects the liquefied natural gas (LNG) market to remain in oversupply for the next six years, but says a shortfall will develop by 2022.

Woodside executive VP for marketing, trading and shipping Reinhardt Matison said on Friday that new supply would have to be sanctioned from 2018 onwards to meet demand. On average, an additional 20-million tonnes a year of LNG capacity would be required.

His comments were contained in presentation slides delivered at an investor briefing day in Sydney and posted online.

Matison also forecast weakening mid-term prices, pointing out that recent agreements showed a 20% reduction in indexed prices, compared with 2013. However, he stated that low prices would stimulate demand and create a more diversified and resilient market.

A price recovery was expected from 2018 onwards, coinciding with the approval of new supply.

Weak LNG prices led to Woodside and its partners, including Royal Dutch Shell and BP, earlier this year placing their Browse LNG project on hold.

MYANMAR RESOURCE
Meanwhile, Woodside on Friday reported an increase in its best estimate contingent resource of 83-million barrels of oil equivalent to 4.48-billion barrels of oil equivalent, following the announcement of two gas discoveries offshore Myanmar in early 2016.

Woodside announced the discovery of 32 m net gas pay in the Block A-6 Shwe Yee Htun-1 exploration well and 62 m net gas pay in the Block AD-7 Thalin-1A exploration well.

CEO Peter Coleman said analysis of the exploratory well data confirmed the development potential of both discoveries, with further appraisal and exploration of four to seven wells planned to start in the first quarter of 2017.

“The logical development option for the Thalin-1A discovery is a tieback to the nearby Shwe field. Our strategy is to fully appraise the discovery in one campaign, thereby facilitating concept select in 2017,” he said.

The Shwe Yee Htun-1 discovery had both tieback and standalone development options.

“We recognise additional exploration potential in areas immediately adjacent to the discovery and will target these to ensure any development concept is commensurate with the full block potential,” Coleman said.