* Asian buyers look to N. America for cheaper gas supplies
* Investors cite Australian costs as a reason for move
* Canada attracts growing number of investors in LNG
* Industry execs sceptical that cheap N. America prices will hold
By Meeyoung Cho and Florence Tan
DAEGU, South Korea, Oct 17 (Reuters) - North America has pushed Australia out of the top spot for new Asian investment in gas development, with most of the supply from existing Australian projects sold off and buyers hunting for cheaper fuel, industry executives said this week.
Australia has been for the past several years the global hotspot for Asian gas investors, with $190 billion in liquefied natural gas (LNG) developments under way to take advantage of its proximity to top buyers such as Japan and South Korea.
But its seven current projects have been parcelled out to off-takers and equity stakeholders, and no new projects are expected to move forward within the next year.
That slowdown and the pull of cheap, abundant North American shale gas has turned heads towards projects just setting up for development in the United States and Canada that are aiming to fill Asia's still burgeoning LNG demand.
"The cost of Australian grassroot projects is going up ... so probably we need to pause," said Shigeru Muraki, chief executive of the energy solution division at Tokyo Gas, speaking at the World Energy Conference in South Korea.
"We're now moving to the U.S. We've already invested in two gas fields - one in Dallas and the other in Canada."
A spate of approvals on U.S. gas export projects, about 50 million tonnes a year of capacity, has removed some of the uncertainty over its LNG supplies, while Canada's vast potential is attracting rising numbers of Asian buyers and investors.
Japanese power monopolies will build 12 gas-fired power plants next year as Tokyo struggles to make up for a shutdown of nuclear reactors. South Korea, amid its own safety scandal, is also looking to cut dependence on nuclear power, which would further boost its gas demand.
Other LNG buyers such as Thailand's PTT Pcl are emerging in Southeast Asia as countries try to diversify away from oil and coal, and as regional output growth fails to keep up with domestic requirements.
Malaysia's state oil firm Petronas recently became Canada's largest foreign direct investor with its $35 billion plan to develop shale gas assets and build an LNG export terminal in British Columbia.
"We're two-and-a-half days closer to Asia, as far as shipping is concerned. Our ambient temperature is a lot cooler than anywhere else in the world, so it takes less energy to make LNG in British Columbia than anywhere else," said Rich Coleman, British Columbia minister for natural gas development, speaking on the province's market advantages.
TransCanada Corp, which is planning to build pipelines to transport Canadian gas to two LNG export projects, said its participation in projects honing in on Asia's fast-growing demand ramped up suddenly.
"I would have never predicted that 24-36 months ago," TransCanada chief executive Russ Girling said, commenting on his company participating in Asia-focused projects worth some C$14 billion ($13.53 billion).
Besides Petronas, the two LNG projects to be fed by Transcanada pipelines involve investments from Korea Gas Corp , Mitsubishi Corp and PetroChina Co Ltd .
British Columbia, the Canadian province with the most gas developments under way, has already attracted around $100 billion of investment so far with three major LNG projects, Minister Coleman said.
With all the potential investment in Canada and more supply approved out of the United States, however, some in the industry have warned against banking on cheap prices.
U.S. gas prices are around $3.80 per million British thermal units (mmBtu), far lower than spot prices for LNG in Asia, currently around $16 per mmBtu .
But the pricey liquefaction process, in which gas is cooled so that it compresses into liquid, and shipping costs will add up, and a substantial outflow of exports is likely to push up U.S. benchmark gas prices.
"Over time the arbitrage is going to be consumed ... and you can expect a convergence of prices," ConocoPhillips executive vice president Don Wallette said.
U.S. gas prices of $3.50 to $4 per mmBtu are not sustainable in any case, executives say.
That might provide another opening for Australia since the rising projects costs there have levelled out with a weaker Australian dollar and a slowdown of the mining boom that had competed with gas developers for labour and other resources.
"The exponential growth in (costs), we've seen that flatten out - what we haven't seen is a material decrease in prices," said Peter Coleman, chief executive of Woodside Petroleum .