10-23-2013, 10:46 AM
So what must Japan do today knowing that (as we have seen several times) LNG prices will likely be in the $11-$13 range overall. They will not get US based shale produced and shipped for any type of "dream" $8 or something like that outside of another severe recession. Isn't going to happen. What is already happening is what we are seeing in PNG. A Japanese company has jumped in with Horizon and wants to move quickly. They will be a major player in that project most likely. Hession was very wise to end exclusivity as quickly as he did. The leverage IOC has right now is their resources. Exxon can play hardball to a point, but I don't think Hession and his team would think twice about negotiating from the point of saying we will not wait for a train 4 and some distant FID. If the Japanese are all over Horizon, they may well be at the table with IOC and an approved operator. No doubt IOC is in both a good spot but a tough one. One can only imagine all of the scenarios being tossed around, pressure being applied and games being played.
It appears Hession and his team have the experience necessary to get a very good deal, but this industry is in a huge state of flux right now and it's interesting seeing what all is being said by buyers, sellers and investors. Japan's only option IMHO is to get aggressive in buying source, giving as much of the project work to Japanese contractors and securing as much of the LNG and liquids products to max their overall returns. PNG is one of the best places for them to do that.
It appears Hession and his team have the experience necessary to get a very good deal, but this industry is in a huge state of flux right now and it's interesting seeing what all is being said by buyers, sellers and investors. Japan's only option IMHO is to get aggressive in buying source, giving as much of the project work to Japanese contractors and securing as much of the LNG and liquids products to max their overall returns. PNG is one of the best places for them to do that.