On February 24, Cheniere Energy’s Sabine Pass plant officially began exporting liquefied natural gas (LNG) when a tanker carrying 3.7 bcf of domestically produced LNG departed for Brazil. A second tanker docked on March 11, and at least eight more will follow in the next two months, each destined for the global LNG spot market. Sabine Pass is one of several LNG plants being built in hopes of capitalizing on the opportunity to ship cheap U.S. natural gas to regions of the world with significantly higher prices. Unfortunately, timing of completion appears to have missed the market with global LNG prices plummeting in recent months.
While it was hoped that U.S. LNG shipments would be lucrative and provide upward price pressure in the United States, the drop in international gas prices have put a damper on these expectations. Cheniere’s first shipments, coupled with increased exports from Australia and Qatar, will increase supply and further drive international price convergence. These effects will only be magnified as other U.S. capacity comes online after finishing construction by 2020. As the global market continues to become more saturated and the supply glut increases, the prospect for success of U.S. LNG exports is dark and puts in question whether or not the LNG plants currently planned will be completed.
SNL Financial: First LNG Export Cargo Departing Feb. 24 for Brazil
SNL Financial: Commodity Prices Pose Risk to US LNG Use in Europe
SNL Financial: Low Gas Prices Seen as Double-Edged Sword for US LNG
SNL Financial: LNG Tanker Docks for Second Sabine Pass Export Cargo
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