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LNG sells at almost $20 in Japan

April 18th, 2008 · 2 Comments

We posted a couple of articles on the economics of liquid natural gas (LNG) and liquified natural gas from Papua New Guinea today (see our section background material on the left). Just after finishing that, another article caught our attention, from the WSJ online. Here’s a quote:

  • “Today, a tanker of liquefied natural gas, or LNG, pulling into port in Japan can command close to $20 per million BTUs, roughly double the price of the U.S. benchmark.”

Close to $20, double the price of the U.S. benchmark, which is around $10Mcf. Hmm. Now, in the article on the economics of LNG posted earlier, it is calculated that building an LNG facility cost around $2.15Mcf. if a plant can be supplied for 20 years. (plus some fraction to get the gas to the LNG facility and turn it back into gas form at the buyers end, which would max out in total at $4.15Mcf). So, selling to Japan would 5-10 fold an investment in an LNG facility. We’re waiting for the results of Elk4 at IOC and the assessment of independent engineering bureau Netherland Sewell, but if these prove what IOC has argued all along, that there is sufficient gas at Elk, we cannot imagine an LNG facility would not be build. The economics are just too good.

Tags: IOC

2 responses so far ↓

  • 1 IOC’s financing problems serious II? // Apr 21, 2008 at 4:44 pm

    […] That seems quite unlikely. Demand for LNG is just exploding, especially in Asia . In Japan, LNG sells at double the price compared to the […]

  • 2 LNG a very hot sector // May 7, 2008 at 5:25 am

    […] If at $100 a barrel, $15 per Mcf of natural gas is competitive with oil, then we are already at $18 per Mcf now, since oil just passed the $120 per barrel mark. Of course, the demand in Asia is so large, that they are paying these sums and more already, as we reported before. […]