Saudi Arabia to hike oil output above 10 mln bpd in April after OPEC+ deal collapse

[0R0 + 6,251]

Last maturing contract for Asia pricing

https://www.barchart.com/futures/quotes/JKMJ20/interactive-chart

 

This time last year article on LNG index pricing $5 and 5.50 before Coronavirus. 

https://www.icis.com/energy-connections/2019/03/global-spot-lng-prices-slide/

https://www.icis.com/explore/resources/news/2020/02/28/10476449/gif-inside-story-west-balkan-gas-market-on-the-verge-of-opening-up

 

 

Japan <$6

https://www.meti.go.jp/english/statistics/sho/slng/result/pdf/202001_e.pdf

And <$10 at Y Charts

https://ycharts.com/indicators/japan_liquefied_natural_gas_import_price

$5.53 Dec 2019 export price (EIA)

https://ycharts.com/indicators/price_of_us_liquefied_natural_gas_exports

Note that there are 192 Tcft (10^12)in LNG in NA alone, and another 100 elsewhere for buildout through the mid 2020s. The 100 "Brownfield" projects will be built soon, the 200 "greenfield" will be delayed till pricing stabilizes and politics quiet down some as they require both shale field development as well as pipelines and terminals so a larger marginal capital investment. Buffet pulled out of the West Canada terminal project amid protests on his railway's tracks in Quebec. 

All of this will happen because the pricing differential of energy content for LNG is half that of Brent even at current low prices. 

Brent based contracts are no longer being renewed. The pricing reference has shifted to NEX and AEX and US Hennry Hub contracts.

[0R0 + 6,251]

[dukeNukem + 80]

On 3/9/2020 at 8:04 AM, Tomasz said:

So can we back to reality.

If you dont believe Oxfrod Institute maybe you will believe your US goverment agency called EIA.

Its port of exit so you should add 1,5 $ for final price

https://www.eia.gov/dnav/ng/NG_MOVE_POE2_A_EPG0_PNG_DPMCF_M.htm

Lets see UK - closest US ally 

2018 prices 5,77 plus 1,5 = 7,27 260 $ per 1.000 m3

2019 5,35 plus 1,5 = 6,85 245 $ per 1.000 m3

Client state Poland

2018 7,12 plus 1,5 307 $

2019 5,71 plus 1,5 7,21 257 $

Gazprom is selling gas to Poland arround 190-200 $ per 1.000 m3 in 2019.

 

 

 

@Tomasz Oxford data about right...US LNG full cost is 1.15* Henry Hub price -0.1$ (Cheniere buying gas with 10cents discount)...Liquefaction cost 3-3.5$ (btw take or pay long term contract)....Transport to Europe 0.7-0.8-1$ (depends on dayrates LNG tankers)...Regasify cost 0.2-0.4$ approx. Plus losing 5-6% of gas volume from point A (Henry Hub) to final point B (after regasify)...Overall now it will be 5.8-6$ per mmBTU or about 210$ 1000m3 (Intentionally I took the lowest possible numbers). But current price environment 1.6-1.8$  mmBTU on Henry Hub is a killer for gas producers, they need 2.5-2.7$ at least to survive. So in "normal" conditions US LNG breakeven cost about 240-250$ per 1000m3.

If anyone talking about "magic technologies" which significantly reduce cost of LNG it is likely a pipe dream.....

Edited March 9, 2020 by dukeNukem

[dukeNukem + 80]

On 3/9/2020 at 7:51 AM, 0R0 said:

The figures they use are outdated. The technology is moving fast. Shipping is essentially free on LNG powered ships that use the boil off gas that would otherwise have been flared. LNG liquefaction is done on the Gulf coast at $2/MMBtu and still makes a profit for Cheniere. The gas price at the well head for TX shale is under $1 most of the time and generally below $2. It is a waste product. Thus the cash breakeven cost is $3, and all in $4. The report publication date does not indicate current practices. The same can be said for Guyana deep sea and Yamal gas byproduct from oil production. 

The economics of LNG are still a moving target. Prices crashed long before the coronavirus outbreak. Yet the LNG trade was making money, though far less than they expected to make.

Any proof for 2$ mmBTU for Cheniere? 

[0R0 + 6,251]

12 minutes ago, dukeNukem said:

Any proof for 2$ mmBTU for Cheniere? 

You can calculate it out of their income statement and volumes processed.  I posted a crude estimate done that way last month somewhere. This is a lower value that is a projection based on claims for efficiency of new NG powered equipment that the were putting in last year. 

[dukeNukem + 80]

38 minutes ago, 0R0 said:

You can calculate it out of their income statement and volumes processed.  I posted a crude estimate done that way last month somewhere. This is a lower value that is a projection based on claims for efficiency of new NG powered equipment that the were putting in last year. 

I am not sure how it works with 2$ mmBTU...Cheniere charges 3-3.5$ per mmBTU and it is linked to long-term contracts "take or pay". 3-3.5$ needed to justify minimum requirements for IRR and to pay for loans. It is not only Cheniere, other North America's LNG facilities charges approx the same money for liquefaction.  

[0R0 + 6,251]

23 minutes ago, dukeNukem said:

I am not sure how it works with 2$ mmBTU...Cheniere charges 3-3.5$ per mmBTU and it is linked to long-term contracts "take or pay". 3-3.5$ needed to justify minimum requirements for IRR and to pay for loans. It is not only Cheniere, other North America's LNG facilities charges approx the same money for liquefaction.  

Yes, and they make $1 in profit. There is no guarantee that they will make a profit when LNG facilities approach demand. Then their margins will fall. Chenier started out with a 70% margin, That rapidly dropped and is now around 30%. That is too high not to attract competition. Tons more capacity coming up in the next year and through 2024 and beyond. 

[dukeNukem + 80]

39 minutes ago, 0R0 said:

Yes, and they make $1 in profit. There is no guarantee that they will make a profit when LNG facilities approach demand. Then their margins will fall. Chenier started out with a 70% margin, That rapidly dropped and is now around 30%. That is too high not to attract competition. Tons more capacity coming up in the next year and through 2024 and beyond. 

It's hard to believe for such a big margin, because other LNG facilities charge approx the same 3-3.5$...If Cheniere's real cost 2$, how they can charge 3.5$ many long-term clients? Anyway, even with this hypothetical 2$ liquefaction fee total US LNG cost in Europe will be 5$ (with low 1.7-1.8$ Henry Hub, which is unsustainable in long run), or 175$ per 1000m3. It is just for breakeven... 

[Gerry Maddoux + 3,627]

The margins will compress but the volume will explode. As Oro pointed out, most of these LNG transports run on boil-off gas from the liquified natural gas--which is 2-4% and basically free of charge (folded into the load price). More and more third-world countries are using the old membrane transporters for offloading floating terminals, so LNG can become a clean, inexpensive fuel source for just about any country--and there are plenty starved for energy. 

Going to be lots of short-hauls. Quick offloads. The cost of transport is the crew and the amortized cost of the ship. But you're right; this is likely to become a low-margin business sustained by a plentiful supply of natural gas at the Gulf Coast. Like any nascent business, Cheniere is trying to make money while the making is good. Soon it will tighten up. But it's a great business plan primarily due to the absolutely mind-blowing volumes of natural gas that is coming online as "waste," nothing more than a by-product that oil producers want to get rid of as quickly as possible. 

And I don't think that's going to change. MbS can make a public spectacle of himself for a day or two, maybe lose his sovereignty a lot of money for a few months, but then, eventually, reality sets in. He needs $84 oil to balance the books and keep his people happy. We need about the same amount. I don't know what Putin needs, but it has to be well north of fifty. 

[0R0 + 6,251]

2 hours ago, dukeNukem said:

It's hard to believe for such a big margin, because other LNG facilities charge approx the same 3-3.5$...If Cheniere's real cost 2$, how they can charge 3.5$ many long-term clients? Anyway, even with this hypothetical 2$ liquefaction fee total US LNG cost in Europe will be 5$ (with low 1.7-1.8$ Henry Hub, which is unsustainable in long run), or 175$ per 1000m3. It is just for breakeven... 

Well, the way I see the boil over is now used to power the CNG enabled engines so the fuel cost of the trip is near nothing, just the boil over loss and lease on the boat dictating the profitable day rate. But this is business, and profits are not guaranteed once your capital has been sunk in. 

So if you are looking to a bare bones price at which the entire chain breaks even - not profitable - then it is `$2 to liquefy. $1 in the field in the Permian, they sell at a 50 cent to $1 discount to Henry Hub and often worse, Essentially free shipping $0.2 for boil over and breakeven gassification $0.2. So LNG will continue to flow at $3.50 at the destination. Projects may stay on hold for a while if the prices don't revive to the $5 mark, but nobody is going to stop a project that is already being built. So if the market remains weak, then it will get even weaker yet as this capacity is completed.