Oil Crash is Help and Hazard for LNG Export Projects
Oil’s rout may have been an unexpected boon for the biggest buyers of liquefied natural gas, but its knock-on effects may come back to bite them.
That is because more than a dozen proposed LNG export projects from the US to Mozambique are at risk of being delayed or scrapped as crude careened to levels that make most of them unprofitable. If fewer of them come to fruition, that would ease a widening LNG supply glut later this decade and potentially lift prices amid breakneck demand growth in Asia, Bloomberg reported.
The multibillion-dollar export terminals typically sell their output at a price linked to crude. While projects are financed based on long-term models, because they take years to build and then operate for decades, if oil and gas prices stay at current levels throughout the year, it could force backers and financial institutions to rethink their plans.
Almost 20 proposed export plants are vying for a shrinking pool of capital after a record number of terminals reached final investment decisions last year. Even before crude’s drop, developers were under pressure from a slump in global gas prices, milder winter temperatures and demand restraints from the coronavirus.
Most developers are looking to sell LNG at $8 per million British thermal units, which has become difficult under market prices.
Brent crude’s forward curve shows oil hitting about $55 per barrel by 2029, a price level that is not profitable for any of the proposed LNG projects, except for a planned expansion in Qatar.
A crowded field of competing US projects could be the most at risk, as developers had already been struggling to attract buyers amid the ongoing trade war with China, the fastest-growing market for the super-chilled fuel.
source: Financial Tribune
Top News
Five last month
Two last year
US Energy Dept finalizes $2.26bn loan for Lithium Americas’ Nevada mine
Abandoned copper mines embraced as fast track to boost output
Solidcore to buy 55% stake in Kazakhstan’s Syrymbet tin deposit for $82.5m
Mercuria eyes equity in African assets, new metals boss says
Glencore posts lower metals output for first nine months, reiterates outlook
Gold price surge adds glitter to tarnished miners
Traders see gold as a surefire bet as coin-toss election looms
Anglo American sells Australian coal JV stake for $1.1 billion
Gold price shows little reaction to jobs data
St Barbara raises $73m to fast-track Simberi sulphide production
Copper price sees biggest drop since May as Trump’s win boosts dollar
Sibanye agrees wage deal for its gold operations, union says
China’s industry ministry plans to step up lithium, cobalt, nickel exploration
Liberty Gold advances Black Pine project permitting
China zinc smelter group sets processing fees for Q1 2025
Brazil prepares to remove illegal Amazon gold miners from Munduruku land
Anglo American sells Australian coal JV stake for $1.1 billion
Solidcore to buy 55% stake in Kazakhstan’s Syrymbet tin deposit for $82.5m
Ecuador to reopen mining register for first time in over six years
St Barbara raises $73m to fast-track Simberi sulphide production
Copper price sees biggest drop since May as Trump’s win boosts dollar
Sibanye agrees wage deal for its gold operations, union says
China’s industry ministry plans to step up lithium, cobalt, nickel exploration
China zinc smelter group sets processing fees for Q1 2025
Brazil prepares to remove illegal Amazon gold miners from Munduruku land
Anglo American sells Australian coal JV stake for $1.1 billion
Solidcore to buy 55% stake in Kazakhstan’s Syrymbet tin deposit for $82.5m
Ecuador to reopen mining register for first time in over six years