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Ohio Utica Shale

High Asian LNG prices to drop as production there grows

By Bob Downing Published: May 16, 2014

From GlobalData this week:


  • Papua New Guinea (PNG) LNG Project holds gas accumulations of approximately 9 trillion cubic feet
  • ‘As well as a lower operating cost advantage, the PNG LNG Project also has a close proximity to the major demand markets in East Asia,’ says analyst

Asia-Pacific LNG Prices to Erode in the Near Future, as Production Increases in the Region, says GlobalData Analyst

LONDON, UK (GlobalData), 15 May 2014 - High Liquefied Natural Gas (LNG) prices across Asia-Pacific (APAC) are expected to continue in the near term; however, there are increasing signs that they will erode as a result of rising APAC LNG production, US exports and the region’s diversification of energy supplies, says an analyst with research and consulting firm GlobalData.

James Hand, GlobalData's Oil & Gas Analyst, states that despite this likeliness of an LNG price crash in the future, the $19 billion Papua New Guinea (PNG) LNG Project, led by ExxonMobil, is very well placed in such an event in the region.

Hand says: “As well as a lower operating cost advantage, the PNG LNG project also has a close proximity to the major demand markets in East Asia, along with favorable fiscal terms offered by the government and a high probability of adding more liquefaction trains at very low additional costs.”

According to GlobalData, the PNG LNG Project holds gas accumulations of approximately 9 trillion cubic feet and is one of only two large-scale LNG projects to begin production in the APAC region during 2014, alongside the Queensland Curtis LNG Project in Australia.

Upstream production from the project will flow for 30 years, exported through 450 miles of pipeline to Port Moresby, where gas will be liquefied by two LNG trains and exported internationally at a rate of 6.9 million metric tons per year, states GlobalData.

Furthermore, the breakeven gas price of the project is approximately $6.6 per million British thermal unit, offering substantial cushioning from potential LNG price shocks once the facility comes online in mid-2014.

“As LNG projects come on-stream over the next four to five years, most notably from Australia, but also from the Middle East, Africa and North America, the supply of LNG into Asia is expected to increase considerably. In fact, Australia is looking to become the world’s primary LNG exporter by the end of this decade, overtaking Qatar,” Hand concludes.




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