Hard for US’ LNG to compete with piped gas in Europe, price wise

Business Materials 28 January 2016 19:42 (UTC +04:00)

Baku, Azerbaijan, Jan. 28

By Aygun Badalova - Trend:

The prospects for the US to become one of the world's largest LNG exporters are reasonable but it will take time, Charles Ellinas, oil market expert, executive president at Cyprus National Hydrocarbons Company (CNHC), believes.

"LNG prices are low and will remain low for quite some time making it difficult," Ellinas told Trend Jan. 28.

In Europe, he believes, the US' LNG will make some inroads but more in terms of bridging the gap, in a supporting role.

"It [the US' LNG] will find it difficult to compete with piped gas on price. It will end up competing with Australian LNG, which is expensive, but not Qatar LNG," Ellinas said. "The cost base of the latter is so low that it can undercut almost any other LNG competitor on price."

But in the longer term, especially in the 2020s, as the expert believes, the US' LNG is bound to become a major player in the LNG market.

The International Energy Agency expects most of the US capacity to be online by 2020, which will make the US the world's third-largest LNG exporter, behind Australia and Qatar.

Currently, five LNG export terminals with a combined planned capacity of 99 billion cubic meters (bcm) per year are under construction in the lower forty-eight states in the US and most of this capacity is scheduled to be operating by 2018.

Most of the capacity that will be available to export from the US' LNG terminals by 2018 is already contracted to customers.

European customers have committed to purchase the US LNG volumes equivalent to 30 percent of the capacity of the first four new LNG export terminals, media reports said citing the International Energy Agency.

In 2014, the EU imported 45 bcm of LNG, or 13.5 percent of its total gas imports, down from 14 percent in 2013 and 19 percent in 2012, as pipeline prices became more competitive.


Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter: @AygunBadalova