• 8 minutes U.S. Shale Oil Debt: Deep the Denial
  • 13 minutes WTI @ $75.75, headed for $64 - 67
  • 16 minutes Trump vs. MbS
  • 3 hours Knoema: Crude Oil Price Forecast: 2018, 2019 and Long Term to 2030
  • 11 hours Nuclear Pact/Cold War: Moscow Wants U.S. To Explain Planned Exit From Arms Treaty
  • 11 hours Why I Think Natural Gas is the Logical Future of Energy
  • 11 hours Merkel Aims To Ward Off Diesel Car Ban In Germany
  • 3 hours Get on Those Bicycles to Save the World
  • 10 hours A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 7 hours Iraq war and Possible Lies
  • 1 day Satellite Moons to Replace Streetlamps?!
  • 1 day Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 1 day Can “Renewables” Dent the World’s need for Electricity?
  • 18 hours Long-Awaited Slowdown in China Exports Still Isn’t Happening
  • 5 hours EU to Splash Billions on Battery Factories
  • 21 hours Can the World Survive without Saudi Oil?
Forget Lithium, This Is The Next Big Thing In Energy

Forget Lithium, This Is The Next Big Thing In Energy

There’s a virtually unknown commodity…

Can We Expect A Rebound Rally Next Week?

Can We Expect A Rebound Rally Next Week?

Despite recovering somewhat on Friday,…

LNG May Suffer Boom-Bust Cycle

A flurry of construction around the world will greatly expand liquefaction capacity for shipping natural gas. Companies are hoping to move low-cost natural gas in places like the United States and Australia and sell it to high-priced markets like East Asia. However, the rapid build out of export capacity may suffer from a classic boom-bust cycle, according to Rice University’s Kenneth Medlock III.

He argues that the Fukushima meltdown created a significant, but temporary, shortage in supply. This opened up a wide gulf between natural gas prices in Asia and other regions in the world. LNG exporters are now planning billions of dollars in newly constructed or retrofitted terminals to take advantage of that disparity. Plans are underway in Australia, the United States, Malaysia, Mozambique, and Qatar.

But the price window may begin to close as capacity comes online and Japan restarts some nuclear reactors. Meanwhile, many projects are rushing to compete for what may actually not be that big of an economic pie. “Capital flows to where it sees opportunity and everybody’s trying to grab that flag first,” Medlock, said in a March 3 interview, according to Bloomberg News. “What happens is that you see too many people trying to grab the flag.” This may result in a bust in a few years when lots of capacity comes online at the same time.

Related Article: Can U.S. LNG Break Russia’s Gas Grip on Europe?

However, John Watson, the Chief Executive at Chevron, disagrees. He argues that billion dollar projects will not move forward if they don’t have the customers ahead of time. “Even companies the size of Chevron don’t build LNG plants without having contracts in hand,” Watson said.

There are many factors that go into determining the profitability of exporting LNG, but a lot will ride on the ability of the U.S. natural gas industry to keep prices low, as well as how big the appetite will be for LNG in Japan, South Korea, and China over the next decade.

By Joao Peixe of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News