LNG for Tariff Relief

The European Commission is mulling over an increase in U.S. LNG shipments in exchange for a removal of the aluminum tariffs, according to an unnamed source who spoke to Sputnik. Sure, Sputnik is not the most reliable source of news and I don't trust unnamed sources but it sure sounds like a nice solution. Everybody wins.

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Yes especially when lng is at leas 30 % more expensive than russian gas. Who will pay the final bill? I

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Wrong, the US consumers are loosing as it will boost the price of NG, they will be hurt much more than by the increased price of aluminum.

Thanks

 

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What's the local consumption of LNG in the United States? I thought most of the gas produced there is used in its natural form but I may be wrong.

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(edited)

On 5/17/2018 at 11:08 AM, Tomasz said:

Yes especially when lng is at leas 30 % more expensive than russian gas. Who will pay the final bill? I

National security does not come cheap. Having LNG ports as an alternative to Russian gas that can get cut off in the future means paying for them somehow. Blending lower volumes of LNG gas with cheaper Russian gas will give a current price that is not too uncompetitive. Once the US gets the needed pipelines built, the LNG gas price may be somewhat lower as more gas will be reaching the globab market. -- It looks like we will be paying more for steel in the US in order to guarantee some domestic capacity in time of war with China. Is it worth it? Hard to say. What is security worth?

Edited by KW64
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On 5/17/2018 at 10:08 AM, Tomasz said:

Yes especially when lng is at leas 30 % more expensive than russian gas. Who will pay the final bill? I

True story Tomasz - US LNG won't break through in Europe because it's around $3 MBtu more expensive than piped Russian gas... 
No matter what Juncker and Trump decide, free market forces will determine which gas to use... and at this point, Russian gas looks like a much better deal for Europe.

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(edited)

Im not sure whether administrators will like this article because its from your rival but thats perfect summary why we can call Russia a Saudi Arabia or swing producer of gas market

https://en.wikipedia.org/wiki/Swing_producer

Quote

Swing producer is a supplier or a close oligopolistic group of suppliers of any commodity, controlling its global deposits and possessing large spare production capacity. A swing producer is able to increase or decrease commodity supply at minimal additional internal cost, and thus able to influence prices and balance the markets, providing downside protection in the short to middle term. Examples of swing producers include Saudi Arabia[1] in oil, Russia in potashfertilizers,[2] and, historically, the De Beers Company in diamonds.[3] By modeling the swing producer behavior, John Morecroft describes two modes: normal swing mode and punitive mode. Usually in the normal mode, the swing producer responds to market price fluctuations by marginally increasing or decreasing its output in order to maintain stable prices for all producers. However, independent participants can take unjust advantage of the reduced supply and increase their output in order to win a larger market share. In such cases, the swing producer switches to the punitive mode and greatly increases its product output in order to reduce prices, causing losses for other producers and making them cooperate.[4]

 

 https://www.naturalgasworld.com/price-of-russian-gas-in-europe-declines-faster-than-export-cost-29369

Quote

 

Gazprom reported the average production cost of natural gas in 2015 at ₽1643 per 1000 cubic meters (mcm) or $27.09/mcm or $0.84/MMBtu.

The corresponding numbers for 2014 are ₽1470/mcm, $38.73/mcm and $1.21/MMBtu. The cost in US dollars is affected by the devaluation of Russian ruble. The average US dollar rate in 2015 was ₽60.66 compared with ₽37.97 in 2014.

 

https://www.naturalgasworld.com/images/screen shot 2016-05-03 at 6_43_20 pm.png

https://www.naturalgasworld.com/images/screen shot 2016-05-03 at 6_23_29 pm.png

 

And something from oilprice for compesation 😊 This article also confirms my thesis for long-term perspective

https://oilprice.com/Energy/Natural-Gas/The-US-Remains-The-Natural-Gas-King.html

Quote

 

The U.S. may continue to lead the world in natural gas production for a few more years, but the level of proved natural gas reserves implies that our lead could be short-lived.

The Middle East’s proved natural gas reserves at the end of 2017 were 2.8 quadrillion cubic feet, nearly ten times U.S. proved reserves of 309 trillion cubic feet. For perspective, U.S. proved reserves are only 4.5 percent of the global total.

Russia has more proved natural gas reserves than any other country with 1.23 quadrillion cubic feet, followed by Iran with 1.17 quadrillion cubic feet. Total proved natural gas reserves at the end of 2017 were enough to satisfy 2017 global production rates for 52.6 years

 

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Edited by Tomasz

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Marina, what do you mean  by Natural form , we have Conventional and Unconventional . The Conventional has a low decline Rate and the Unconventional Is approx. 35 % per yea r( that's why they keep drilling New wells )

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I think it is likely the USA will give in on Aluminum but it will be NO for Steel

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(edited)

16 hours ago, MUNDIREGINA said:

Marina, what do you mean  by Natural form , we have Conventional and Unconventional . The Conventional has a low decline Rate and the Unconventional Is approx. 35 % per yea r( that's why they keep drilling New wells )

I meant non-liquefied. I was wondering if there was any domestic consumption of LNG in the US.

Edited by Marina Schwarz

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13 hours ago, Marina Schwarz said:

I meant non-liquefied. I was wondering if there was any domestic consumption of LNG in the US.

U.S. Office of FOSSIL ENERGY

In 2017, the U.S. exported over 700 billion cubic feet (Bcf) of natural gas in the form of LNG in large LNG tanker ships, along with a small quantity shipped by container or in trucks.  In total, as of March 2018, U.S. LNG has been delivered to 27 countries on five continents and the list of destinations will continue to grow.  The U.S. also still imports some LNG, mostly to New England, a region of the country constrained by limited pipeline and storage capacity. 

 

@Jan van Eck to the white courtesy phone please.  New England calling.

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So, it's cheaper to import than to use the LNG produced locally? Interesting.

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On 7/29/2018 at 11:32 AM, John Houbion said:

Wrong, the US consumers are loosing as it will boost the price of NG, they will be hurt much more than by the increased price of aluminum.

Thanks

 

Maybe.  Large quantities of NG are used in electricity production, but thanks to operating reserves, utilities have fuel flexibility.  Fuel prices determine which plants run and which are kept in reserve.  Right now, NG is the cheapest, so those new combined-cycle NG plants are running flat-out with coal plants held in reserve.  However, NG is only barely cheaper.  With a minor price increase, we could see coal plants running flat-out with NG held in reserve. 

Thus, exports could increase NG prices a little, but there will be no price spike.  Growing export capacity can't overwhelm fuel-switching in the short term, and increased NG production solves the problem in the long term.  The end result of exports is increased domestic production of both natural gas and coal, stable electricity prices, and - if the NG price increase becomes significant - investment in home energy efficiency.

Prices have a sweet spot between rock-bottom and gouging at which people are simultaneously comfortable and incentivized to innovate.  Fetching higher profits overseas could bring NG into that ideal range, and America would be better for it. 

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