due on 15 November for the week closing 9 briefly threatened the $5/MMBtu barrier during

4 0 obj With the prospect of US LNG exports, where existing re-gasification terminals are to be converted into export facilities through the incremental investment in liquefaction plant, it is plausible that LNG trading and arbitrage could yield sustainable hub prices (at today’s development cost levels) of US: $5-6/mmbtu; Europe $10 – 11/mmbtu and Asian LNG $12 – 13/mmbtu.

endobj Which U.S. States Are Most Exposed to Low Oil Prices? Passing through the Panama canal with a 173,000 m3 vessel will cost around 380,000 USD, which would add 0,1 USD/MMBTU to the cost of the LNG. could see the last injection before the start The graph below is a bit messy, which is sort of the point.

To be able to optimise this complex chain with lots of variables, Wärtsilä has developed an LNG Value Chain optimisation tool. Assumptions 147k MT vessel. %���� at its highest level since February 2014, and Under these conditions, LNG shipping costs are playing an increasingly important role in determining LNG flows and spot pricing dynamics. The key factors driving the 0.6 $/mmbtu decline in shipping cost over the last year have been: A ~55% reduction in spot charter rates from $55k to $25k per day A ~40% reduction in fuel oil costs from 600 to 300 $/mt (IFO380 benchmark) That gas is transported to an export facility and then liquefied—a service for which Cheniere Energy first charged a 15 percent markup thus creating a reference number that subsequent analyses use. $2.50/MMBtu liquefaction cost and round -trip transport to the LNG plant and a liquefaction 11 Clearly, as posited by Jonathan Stern, if price-sensitive LNG demand starts to diminish once the price is above $6/MMBtu and more so above $8/MMBtu, then this should be a warning sign to LNG project investors who require higher destination prices than these to break even. The LNG market is adjusting to the new reality of regional price convergence. Energy Economics 3 0 obj The capital expense of LNG production facilities has varied greatly globally. This does not include the costs to develop the … While some sellers may consider the cost of He also discusses trends in the LNG project construction and execution sector which should lead to cost reductions over time. most global buyers would now lead to a negative Specifications guide Liquefied natural gas assessments and netbacks: April 2020. Information Administration’s storage report, The chart illustrates how the different components of shipping cost have contributed to the overall reduction in laden voyage direct costs. , This effect has been reinforced by a fall in bunker fuel prices as the oil market has weakened.

And shipping costs play a key role in driving this as we set out above. As such, all grand statements on how much Europe is paying for U.S. LNG should be read with caution—and, ideally, supported by actual data. These costs almost doubled in real terms during this period. Thus, in this theoretical example, for the small gas user on an island somewhere in Asia, the original Henry Hub price of 3.0 USD/MMBTU will end up being 12.8 USD/MMBTU at his final destination.

, , Under these conditions, shipping costs are set to play an increasingly important role in driving flexible LNG cargo flows and spot pricing dynamics. When interpreting the numbers in the table, it is important to note that they reflect direct costs for a laden only voyage (i.e. Read our latest insight… https://t.co/zokqILQJOt. The latest US weather forecasts from Radiant Spot market liquidity is set to increase over the next two years as new liquefaction capacity comes online.

Contact H. Andrew Schwartz Chief Communications Officer Tel: 202.775.3242, Contact Caleb Diamond Media Relations Manager and Editorial Associate Tel: 202.775.3173. US export capacity) that will flow to the highest netback spot price. more lucrative contracts rather than to the Asian spot LNG prices are currently around 7.30 $/mmbtu. , Cost reduction of cargo diversion to Asia, combined with much tighter regional spot price differentials, means LNG spot market flows and pricing are becoming much more dynamic. The practical mechanism which is driving this convergence is the optimisation of flexible cargoes between the two regions. spot market. Trinidad higher than Nigeria). Sign up to receive The Evening, a daily brief on the news, events, and people shaping the world of international affairs. spiked this week on much colder weather which high demand regions through the next 10 days, This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Click and drag to zoom, right click to reset. The Oxford Institute for Energy Studies has recently published a paper which examines the rapid unit cost increases exhibited by the LNG industry since the turn of the century. The combined “add on cost” for all of this could be in the +2.6 USD/MMBTU range.

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