Undated file photo shows an Australia ship carrying liquefied natural gas sailing off the coast of Western Australia.HO/Reuters
In the rush to develop liquefied natural gas (LNG) exporting capacity, Canada could have an ace in the hole: the ability to ship to some markets through conflict-free waters even as a squabble over a small group of islands between Japan and China heats up.
Many speakers at Monday's Canadian Energy Research Institute natural gas conference in Calgary bemoaned the fact Canadian LNG development is behind other countries such as Australia, which already has established terminals and trade links with markets in Japan and China. Quickly executed export projects, nearly every speaker said, are crucial to get higher world prices for Canada's abundant natural gas.
But in his list of pros and cons for LNG development in Canada, Gary Weilinger – Spectra Energy Corp.'s vice-president for strategic development and external affairs – said Canada might have at least one geopolitical advantage.
"We're very close to Japan and Korea," he said, adding "in Japan's case, without the need to go through Chinese waters – currently subject to a border dispute you may have read of."
China and Japan have been in a territorial dispute over a cluster of small, uninhabited islands in the East China Sea – the Pacific Ocean east of China – since last year. Both countries have filled the area's waters with coast guard vessels and warships. That's in addition to tensions in the South China Sea, where six countries including China are claiming all or a piece of another set of island groups.
Mr. Weilinger said even with the International Energy Agency stating that global demand for natural gas expected to climb 55 per cent by 2035, time is of the essence in developing links with Asian markets. Potential buyers in Asia are worried about how long it takes to get LNG projects and infrastructure regulatory approval in Canada, he said. "I've been asked in Asia point-blank: 'Can you get projects approved in Canada?'"
Economics professor Paul Sullivan, of the National Defense University in Washington, D.C., also argued that global and regional political tensions will figure prominently in the future of LNG transport around the world.
"The tensions between China and Japan are not insignificant," Dr. Sullivan said at Monday's conference.
He too said the global market for natural gas is shifting so quickly that: "If you're not in the game soon, forget about it."
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