China's Unconventional Push May Impact Australian LNG

A senior expert with McKinsey and Company has put the Australia's LNG industry on notice that China's fast-growing shale gas industry could threaten the Asian country's appetite for gas from more than $200 billion of local projects.

Pedro Haas said should shale gas production in China takes off as it has in the US, domestic production could provide as much as a quarter of the country's total gas demand within four years.

"US (shale gas production) has gone from 20 billion cum to 100 billion cum in the past five years," Mr Haas said. "If you expect a similar growth pattern replicated in China, China would be producing 50 billion cum by 2015 and almost 100 billion by 2025."

Total Chinese gas demand was forecast to hit 200 billion cum by 2015 and 284 billion by 2020.

However, Mr Haas said it was too early to tell if this potential surge in shale gas production would be more of a challenge to coal production or LNG imports.

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