Huge gas supplies to "kick in" soon, BP tells MPs

London -- Natural gas supply will start to catch up with demand by the mid-2007 as new infrastructure and supply arrangements take effect, according to Vivienne Cox, BP's chief executive, gas, power & renewables.

"This past winter, supply and demand was extremely tight as you know – and it will be tight again this winter. After that the market should ease as the full array of new infrastructure and supply arrangements kick in," Cox said in a 12 June speech to the UK Parliamentary Energy Group.

In the next 10 years, Cox forecast that LNG global supply will be scaled up to the order of 50 bcfd ­ equivalent to the entire European regional gas market today. She concluded: "This wave of LNG should be a factor in bringing down gas prices from the very high levels we see today."

The BP executive noted concern over the reliability of natural gas supplies in the UK as the country moves away from self-sufficiency and the problems of internal barriers and lack of connectivity in the European market.

However, the world has enormous gas resources and there is now enormous opportunity to direct the industry’s know­how and technology increasingly towards gas, said Cox. There is also an increasing international trade in gas -- currently 25% moves cross border through pipelines or as LNG, she added.

While there are plenty of gas resources globally, projects to develop long distance traded gas are capital intensive and require long lead times, which has led to a lag in responding to market tightness, the BP executive explained.

"Investments are going in though with the five largest companies in the oil and gas industry globally have doubled their investments since 2000 to more than $50bn," stated Cox.

For example, she cited how BP is constructing an LNG plant in Indonesia, which will produce one billion cubic feet of LNG (liquefied natural gas) per day from 2009 -- 10 years after the initial confirmation of reserves.