Abstract in English:
A surge in new supplies of liquefied natural gas (LNG) is about to hit the global market over the next several years. LNG export projects already under construction worldwide will add up to 175 billion cubic meters (bcm) of LNG capacity by 2020, mainly from Australia and the United States, and additional projects will move ahead as developers line up more customers.
The rise in LNG supplies will encounter substantially lower gas prices than in recent years and a slowdown in global gas demand, raising questions about the economics of LNG projects. For US exporters, liquefaction and tanker transport will add about $5.30 per million British thermal units (mbtu) in costs for LNG sent to Japan. The cost is similar to liquefy, transport, and regasify LNG sent to Europe, where the cost of regasifying LNG needs to be included to compare its price with pipeline gas.1 With average prices for LNG falling below $8 per mbtu in Japan and even lower in Europe, there is little margin for profit even with Henry Hub prices currently at about $2.40 per mbtu.2 However, LNG exporters are likely to continue selling as long as their variable costs can be covered.
For US exporters, the outlook is more favorable for companies who have concluded a final investment decision to go ahead with an LNG export project. Most of these projects are under construction and have much of their planned output already contracted to sell over twenty years. Most of the US sales will not begin until after the next two years, when demand may be stronger.
The majority of Australia’s projects will already be up and running by 2018 and therefore pose less competition for US exporters seeking to acquire new LNG customers. US projects are also ahead of proposed projects offshore East Africa and in the Eastern Mediterranean, which may not come online until after 2020.