Exports of LNG from North America will not cut prices for Asian buyers or address fundamental supply issues in the region, the head of the International Energy Agency said Monday.
"There is one thing that Asia cannot count on -- cheap, abundant gas unleashed by the [US] shale gas revolution," said Maria van der Hoeven, executive director of the IEA.
Although some North American LNG exports would start soon, "it will not be enough to supply the entire region, and it will be expensive," said van der Hoeven, who was speaking at an energy conference in Singapore.
Asia has two ways to avoid paying top prices for natural gas -- find more of it and use less of it, van der Hoeven suggested, adding that the "good news" is that both are possible given that Asia contains 10% of the world's potential conventional gas reserves.
But even then, not all of that gas will be produced and not all of the gas that is produced will be used exclusively in the region, she added.
"Getting more gas out of the ground will require government policy that creates efficient gas markets across the region," she said.
Van der Hoeven noted that some of the region's former gas exporters, such as Malaysia and Indonesia, now import gas.
"There is simply no scenario where Asia becomes self-sufficient in gas," the IEA head said.
"The most valuable energy is energy that is not used at all," she said.
Warming to the conference theme, "Shaping Asia's Energy Connections," van der Hoeven said there was a clear connection between increased energy efficiency and economic growth.
FUEL SUBSIDIES WORK AGAINST EFFICIENCY
In response to a question, van der Hoeven, who was the Netherlands' economic affairs minister between 2007-2010, hit out at fossil fuel subsidies. Although many governments are seeking to phase them out, they are the enemy of energy efficiency, she said.
Fuel subsidies globally cost $540 billion in 2013 -- five times more than renewable subsidies -- $51 billion of that in Southeast Asia.
While she did not rule out targeted financial aid to help the very poor buy fuel, van der Hoeven argued that fuel subsidies mostly benefit the wrong people.
Pointing to reductions and phasing out of fuel subsidies across much of Asia this year, the IEA boss said: "It's very important that you bring together all stakeholders...it is possible."
Session moderator Mark Gainsborough, Shell's executive vice president global commercial, asked van der Hoeven what had changed in Asia since the IEA issued its last outlook for the region one year ago.
Van der Hoeven pointed to recent gas market developments.
The fall in the crude oil price has seen the relationship between gas and crude prices "in a more positive situation," she said, while new sources of gas supply, from the US, Africa and Australia, were on the horizon.
On the chances of a gas/LNG trading hub developing in the region -- something Singapore is positioning itself to become -- van der Hoeven agreed that Singapore was a good candidate, but thought several other places in Asia would also strive to meet the conditions.
The right conditions included a physical market, storage, liquefaction and regasification facilities, a regulatory framework and a government that "is not hands-on, but hands-off."
Changes to destination clauses in traditional LNG contracts and a benchmark spot price were also required before a real regional market could develop, she added.
Overall, gas is good because it is "cleaner than coal...and it's an excellent bridge to renewables," van der Hoeven said.
Van der Hoeven was answering questions after giving the afternoon keynote speech on the opening day of the Singapore Energy Summit, part of Singapore International Energy Week, which is organized by Singapore's state Energy Market Authority.
