SOURCE: Industrial Info Resources

Industrial Info Resources

March 10, 2014 06:15 ET

Are U.S. Companies Being Realistic About Global LNG Prices?, an Industrial Info News Alert

SUGAR LAND, TX--(Marketwired - Mar 10, 2014) - Researched by Industrial Info Resources (Sugar Land, Texas) -- February was an interesting month for natural gas markets. In the U.S., a steady stream of winter storms and declining stockpiles drove up regional spot prices in the Northeast and Midwest and raised natural gas futures above $6 per million British thermal units (MMBtu) for the first time in four years. Even in the midst of these higher domestic prices, eyes still remain fixed on the Asian markets, as also in February, natural gas spot prices for Japan and South Korea reached an all-time high of $20.20/MMBtu, leaving little question as to why future North American liquefied natural gas (LNG) producers are chomping at the bit to ship product to these countries.

However, as U.S. project owners line up to receive permission from the Department of Energy to export to countries without free trade agreements with the U.S., and construction activity for billions of dollars of export facilities is planned or already under way, some are questioning the long-term viability of profits from U.S. LNG exports for the companies involved.

While the export of LNG to areas of high demand and high prices may never actually reach a point of unprofitability, one of the obvious concerns of any potential exporter is recouping the tremendous up-front costs of constructing the liquefaction and export facilities. Those first on the scene will have an easier time doing this while prices in Asia remain high. Latecomers could very well find that taking a step back from the excitement and hooplah surrounding the U.S.' suddenly abundant supply of natural gas and considering the sustainability of current global pricing structures might prove a valuable exercise in restraint.

To read the rest of this article, have a look at the current edition of Industrial Info's NavigatIIR online newsletter.

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