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  • lisahuang54321 lisahuang54321 Sep 20, 2011 8:33 PM Flag

    LNG surges

    Yes, and there are other points to consider for the LNG bulls...

    the price of LNG in Japan is high, we know that. But once all the surplus NG in the US and elsewhere is available for export, will those prices still be high? Naturally the differentials will be smoothed out which may mean higher NG prices here but lower in places like Japan. Don't expect $20 or even $15 in the US even when we can export.

    even more important...Cheniere's LNG import terminal was constructed just a few years ago when it looked like the US would have a shortage of NG. In just a few years (by the time they completed it) the situation reversed such that there is really no need for any import terminal.

    Why can't the same thing happen overseas? The US has demonstrated that huge amounts of gas can be extracted from shale, enough to turn a national deficit into a huge surplus. Other countries are just starting to copy the US methods and are likely to unlock their own huge NG deposits (unless you believe that the US is the only part of the world with significant shale gas).

    Poland, China, Australia, etc will all be producing much more NG (not to mention very cheap LNG from Qatar). If Japan needs LNG imports (which it likely will continue to do), if it can get them from China or Australia it will do so - distance costs big money in the world of LNG transportation. So there is a real possibility that by the time the US is ready to export, there will no longer be a demand for US LNG exports. Exactly what happened with its import infrastructure.

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