Baku, Azerbaijan, July 13
By Elena Kosolapova – Trend:
US LNG will become competitive in Europe only when oil prices return to approximately $60-70 per barrel, believes Claudio Steuer, Director of SyEnergy, a UK energy consultant focused on strategy and commercial matters involving natural gas and LNG value chains.
“At the current low oil and gas benchmarks prices, traditional and new European gas supply contracts offer lower prices than USA LNG imports, and US LNG deliveries into Europe are expected to be much lower than originally anticipated,” Steuer told Trend by email.
The consultant noted that US LNG in its majority at the present time is commercialized under a “liquefy of pay” long term fixed tariff and available on FOB price basis on the US Gulf, adding that buyers still have procure LNG shipping services from a third-party to organize delivery of US LNG to the desired LNG re-gasification terminal.
“When you consider the additional possibilities of natural gas supply from the Caspian Region and East Mediterranean it is easier to see why in the long-term US LNG can only effectively contribute to enhancing European energy security if it is able to cut in half the current high cash cost structure and adopt a full service delivered LNG business model,” Steuer said.
He noted that over the longer term, it is more likely that US LNG will supply markets closer to the centers of production like Mexico, Caribbean Islands, Central America and South America.