LNG prices set to crash in APAC region

GlobalData’s Oil and Gas Analyst, James Hand, expects high LNG prices across the Asia-Pacific (APAC) region to continue in the near term. However, Hand believes thatthere are increasing signs that they will erode as a result of rising APAC LNG production, US exports and the region’s diversification of energy supplies.

Hand also believes that despite the likeliness of an LNG price crash in the future, the US$ 19 billion Papua New Guinea (PNG) LNG Project, led by ExxonMobil, is very well placed in such an event in the region.

Hand sais: “As well as a lower operating cost advantage, the PNG LNG project also has a close proximity to the major demand markets in East Asia, along with favourable fiscal terms offered by the government and a high probability of adding more liquefaction trains at very low additional costs.”

GlobalData reports that the PNG LNG Project holds gas accumulations of approximately 9 trillion ft³ and is one of only two large-scale LNG projects to begin production in the APAC region during 2014, alongside the Queensland Curtis LNG Project in Australia.

Upstream production from the project will flow for 30 years, exported through 450 miles of pipeline to Port Moresby, where gas will be liquefied by two LNG trains and exported internationally at a rate of 6.9 million tpy.

The breakeven gas price of the project is said to be approximately US$ 6.6/million Btu, offering substantial cushioning from potential LNG price shocks once the facility comes online in mid-2014.

Hand concludes: “As LNG projects come on-stream over the next four to five years, most notably from Australia, but also from the Middle East, Africa and North America, the supply of LNG into Asia is expected to increase considerably. In fact, Australia is looking to become the world’s primary LNG exporter by the end of this decade, overtaking Qatar.”

Adapted from press release by Callum O'Reilly

Read the article online at: https://www.lngindustry.com/liquefaction/15052014/lng_prices_set_to_crash_in_apac_region_595/