Is U.S. LNG Too Expensive For Asian Markets?
The liquefied natural gas (LNG) market is returning to life. With prices in the critical Asia market stabilizing, on the back of news that China’s January imports surged 40 percent year-on-year — continuing a trend toward rapidly-rising gas use here.
There’s been a lot of speculation that U.S. LNG producers can grab a big share of this growing market. With first-ever exports from America recently sailing to Japan and South Korea.
And now, the first numbers on export economics for those destinations are hitting the street — and they don’t look great.
Japanese trade data released Friday showed that U.S. shale gas imports have been very costly. Coming in at nearly double the price of other suppliers.
Japanese Ministry of Finance reports showed that importers paid $645/tonne for 211,237 tonnes of U.S. LNG during January. A full 67 percent higher than the average price paid for all imports, which came to just $386/tonne during the month.
Costs for U.S. shipments were substantially higher than Japan’s lowest-cost imports — which came from Angola, at a cost of $337/tonne.
In fact, the next-highest-cost supplier to Japan — Brunei — only charged $416/tonne. Still considerably cheaper than American imports.
Here’s the critical thing. When the U.S. LNG export space was starting up, many observers pegged the costs for shipments to Asia at between $12 and $14/MMBtu. A range many analysts said was uncompetitive with other suppliers globally.
And this week’s data confirms those forecasts. With the price tag for U.S. imports equating to $13.10/MMBtu.