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This is just a wishful thinking. I live in a country that would benefit a lot from alternative sources of gas, but for now LNG from US is just not price competi

by mamon 9y ago

This is just a wishful thinking. I live in a country that would benefit a lot from alternative sources of gas, but for now LNG from US is just not price competitive with the gas from Russian pipelines (as in: being 50-75% more expensive). Funny thing is, that during his visit, president Trump announced that he plans to increase LNG price further.

adventured 9y ago
US LNG is about 20% more expensive than the typical European gas price. With US domestic prices closer to $3, versus $5 in Europe, the US will be able to further narrow that gap with scale and more terminals (on both sides of the transaction). Then you factor in the willingness of Europeans to pay a small mark-up to not be so dependent on Russian energy supply. (from August) "Currently, the US gas price is about $2.85 per MMBTU, a measure of energy content in fuel. This rises above $6 after factoring all the associated fees for shipping, liquefication and gasification, according to Gazprom estimates. This compares with about $5 per MMBTU in much of the European market, where Gazprom accounts for about a third of supply." https://www.ft.com/content/352f4cac-6c7a-11e7-b9c7-15af748b60d0 https://www.ft.com/content/352f4cac-6c7a-11e7-b9c7-15af748b6...
- notfromhere 9y ago
  Transport via boat is just not going to beat direct pipe access from siberia
  - saryant 9y ago
    Unless those pipelines were cut off. Energy and geopolitics are practically the same thing.
  - adventured 9y ago
    No doubt. Fortunately it doesn't have to. The US doesn't need to beat Russia's lowest pipeline price, it needs to get near the European average price. Russia needs to yield a fat profit on their exports, which is one reason why Europe's gas prices are so much higher than the US domestic prices to begin with. The financing of their government and their economy in general are both heavily dependent on that. Russia isn't going to be willing to drop prices much, while the US exporters will look at every possible means to drive down their costs and pricing (they can afford a much slimmer margin than Russia can on its exports). Russia has 1/3 the natural gas market in Europe. It's unlikely they're going to grow that market position (which is why they're looking east for growth), their customers do not want to be more reliant on them. As Europe shuts down coal, it's going to be replaced by natural gas and renewables; most of that natural gas will be from sources other than Russia (meaning: Qatar, Australia, US, etc).
- vetinari 9y ago
  You know, all these ships, terminals and people around it are not for free. That "little markup" means than many European industries would be dead. They literally cannot afford it.
  - philipkglass 9y ago
    Any European industries that would be killed by gas imports running at $6/MBtu died years ago. As recently as 2013, imported gas prices peaked over $12 and spent the whole year above $11: https://ycharts.com/indicators/europe_natural_gas_price https://ycharts.com/indicators/europe_natural_gas_price Of course no industry is going to voluntarily pay more for fuel than it must. If gas imports from the US to Europe stay around $6, there is little direct benefit at present, but it provides competition to ensure that import prices won't rise to such high levels again.
- baybal2 9y ago
  You miss the point, Russian gas will always be cheaper no matter what. The sole point of keeping gas price that low for Russia is to maintain its gas blackmailing power over Europeans
  - Bendingo 9y ago
    >to maintain its gas blackmailing power over Europeans You throw around the word "blackmail" as if this is established fact. Please tell when Russia has ever blackmailed Europe using gas? The only times when gas supply to Europe has been disrupted, were due to disputes with Ukraine (who has been found to divert EU gas to themselves). And in this case, only the gas intended for use by Ukraine was reduced. Supplying gas directly from Russia to Germany is intended to create more reliable supply, by removing transit through dishonest and thieving country. [0] https://en.wikipedia.org/wiki/Russia%E2%80%93Ukraine_gas_disputes https://en.wikipedia.org/wiki/Russia%E2%80%93Ukraine_gas_dis...
- rotrux 9y ago
  I know we're talking about European demand-allocation, but check out what our little-brother to the north is up to: https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/archive/2011/index-eng.html#smmr https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/archive/2011/index-...
  - rotrux 9y ago
    IMO: Geopolitically/economically, Canada should be thought of as America...'cept there are less repercussions 'bout posturing & the Arctic.

by mamon 9y ago

adventured 9y ago

US LNG is about 20% more expensive than the typical European gas price. With US domestic prices closer to $3, versus $5 in Europe, the US will be able to further narrow that gap with scale and more terminals (on both sides of the transaction). Then you factor in the willingness of Europeans to pay a small mark-up to not be so dependent on Russian energy supply. (from August) "Currently, the US gas price is about $2.85 per MMBTU, a measure of energy content in fuel. This rises above $6 after factoring all the associated fees for shipping, liquefication and gasification, according to Gazprom estimates. This compares with about $5 per MMBTU in much of the European market, where Gazprom accounts for about a third of supply." https://www.ft.com/content/352f4cac-6c7a-11e7-b9c7-15af748b60d0 https://www.ft.com/content/352f4cac-6c7a-11e7-b9c7-15af748b6...

notfromhere 9y ago
Transport via boat is just not going to beat direct pipe access from siberia
- saryant 9y ago
  Unless those pipelines were cut off. Energy and geopolitics are practically the same thing.
- adventured 9y ago
  No doubt. Fortunately it doesn't have to. The US doesn't need to beat Russia's lowest pipeline price, it needs to get near the European average price. Russia needs to yield a fat profit on their exports, which is one reason why Europe's gas prices are so much higher than the US domestic prices to begin with. The financing of their government and their economy in general are both heavily dependent on that. Russia isn't going to be willing to drop prices much, while the US exporters will look at every possible means to drive down their costs and pricing (they can afford a much slimmer margin than Russia can on its exports). Russia has 1/3 the natural gas market in Europe. It's unlikely they're going to grow that market position (which is why they're looking east for growth), their customers do not want to be more reliant on them. As Europe shuts down coal, it's going to be replaced by natural gas and renewables; most of that natural gas will be from sources other than Russia (meaning: Qatar, Australia, US, etc).
vetinari 9y ago
You know, all these ships, terminals and people around it are not for free. That "little markup" means than many European industries would be dead. They literally cannot afford it.
- philipkglass 9y ago
  Any European industries that would be killed by gas imports running at $6/MBtu died years ago. As recently as 2013, imported gas prices peaked over $12 and spent the whole year above $11: https://ycharts.com/indicators/europe_natural_gas_price https://ycharts.com/indicators/europe_natural_gas_price Of course no industry is going to voluntarily pay more for fuel than it must. If gas imports from the US to Europe stay around $6, there is little direct benefit at present, but it provides competition to ensure that import prices won't rise to such high levels again.
baybal2 9y ago
You miss the point, Russian gas will always be cheaper no matter what. The sole point of keeping gas price that low for Russia is to maintain its gas blackmailing power over Europeans
- Bendingo 9y ago
  >to maintain its gas blackmailing power over Europeans You throw around the word "blackmail" as if this is established fact. Please tell when Russia has ever blackmailed Europe using gas? The only times when gas supply to Europe has been disrupted, were due to disputes with Ukraine (who has been found to divert EU gas to themselves). And in this case, only the gas intended for use by Ukraine was reduced. Supplying gas directly from Russia to Germany is intended to create more reliable supply, by removing transit through dishonest and thieving country. [0] https://en.wikipedia.org/wiki/Russia%E2%80%93Ukraine_gas_disputes https://en.wikipedia.org/wiki/Russia%E2%80%93Ukraine_gas_dis...
rotrux 9y ago
I know we're talking about European demand-allocation, but check out what our little-brother to the north is up to: https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/archive/2011/index-eng.html#smmr https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/archive/2011/index-...
- rotrux 9y ago
  IMO: Geopolitically/economically, Canada should be thought of as America...'cept there are less repercussions 'bout posturing & the Arctic.