USA by 2020, we intend to become one of the key suppliers of liquefied natural gas (LNG) in the world. Estimated geography of supplies – not only in Asia but also in the countries of Central and Eastern Europe. However, analysts polled by TASS believe that an American product not compete with Russian pipeline gas. However, the excess volume of supply from the New world can affect the prices and “impair” investment attractiveness of future Russian LNG projects, they say.
America give gas
About the plans to oust Russian gas from the European market the US President Donald trump said during his recent visit to Poland: “the United States can help Poland and other European countries to diversify energy suppliers, so they were not hostages, not dependent on a single supplier”.
Warsaw has long declared intentions to find an alternative to purchases from Gazprom, with whom she in 2022 expiring contract. In 2015, in the Polish town of Swinoujscie was introduced the gas port with a capacity of 5 billion cubic meters, which can accommodate tankers with liquefied natural gas from anywhere in the world. But as long as it takes, basically, only a small amount of gas from Qatar. However, in June, the port received its first tanker from the United States.
“Donald trump is getting ready to radically change U.S. energy policy using natural gas exports as a tool of foreign policy and to increase deliveries of LNG to China and other Asian countries”, – wrote in June, the Financial Times newspaper. The new administration expects that U.S. producers will be able soon to conclude contracts on its delivery in China, Japan, India and other countries in the Asia-Pacific region (APR), notes the edition.
By 2018, the U.S. needs to turn from an importer into an exporter of LNG, said in June the country’s energy Minister Rick Perry. This probably should promote and the bill on the liberalization of gas exports, which recently was introduced in Congress.
Enter new export facilities planned in the US in the run up to 2020, can really bring the States into the three largest suppliers of LNG in the world behind Australia and Qatar, analysts say, talked with TASS.
“In the United States launched only one LNG export terminal – Sabine Pass – but by 2020, the operation must be entered four factories. Their total capacity is almost 100 billion cubic meters per year, which is slightly less than the volume of LNG supplied by Qatar,” said Fitch Ratings analyst Dmitry marinchenko. Current capacity the American terminal is 18.6 billion cubic meters per year.
According to the analyst, Vygon Consulting Catherine Kolbikova, contracted at the moment American power for the liquefaction is able to provide about 39 million tons (54 billion cubic metres) exports by 2020.
But you have to understand, she notes that the main volumes of gas were sold in the period of high oil prices, while 2015 contracts were signed only by 3.2 million tonnes, i.e. 8% of all volumes. “Therefore, after 2020 the growth of exports from the U.S. likely will slow down,” she said.
The tube is not a hindrance
The increase of American exports will certainly put pressure on the market, says analyst of Energy center business school SKOLKOVO Alexander Sobko. He attributes this to the fact that investments in the factories have done, but because the gas producers are willing to sell LNG even with a payback of only operating, not capital costs.
“In this case, the price of American LNG will be $5 per million BTU (), which roughly corresponds to the level of prices for Russian pipeline gas in Europe, he says. – That is American LNG can “bring down prices” Russian pipeline gas supply”.
Marinchenko also agrees that if the part of American gas exports is directed to Europe, in the medium term, competition among suppliers of liquefied and pipeline gas, mostly from Russia, the continent could worsen. Gazprom will probably continue to make concessions to the European buyers, in order to maintain market share,” he says.
However, for the competitiveness of Gazprom in Europe marinchenko not to worry. “The production cost of one cubic foot (0,028 cubic meters) for Russian gas, including transportation and taxes, does not exceed $3. This is significantly lower than the costs of American producers of LNG and significantly lower than current spot () prices,” he concludes.
Russian and American gas in General will not compete in Asia and Europe, according to Norwegian analysts Rystad Energy consulting Sindre, Knutson and Tim Birkeland. “Russian pipeline gas is likely to continue to provide a significant portion of the import needs of China and Europe, while deliveries of American and other producers of liquefied natural gas will play a secondary role,” they write.
Kolbikova from Vygon Consulting reminds that the supply of LNG to Europe from the U.S. remain largely unprofitable. In 2016, the cost of us LNG supplies to this region amounted to us $6.5 per million BTU, with an average import price of $5.6, she says.
According to March 2017, 7 million tons exported from the United States LNG 40% was delivered to South America, 30% in Asian Pacific countries and only 14% went to European countries, equivalent to 1 million tons (1.3 billion cubic metres), gives the figures she.
“The supply in competing with Russian gas in the country occur regularly. From February 2016 to March 2017 only 0.5 billion cubic meters were sent to Turkey and 0.1 billion cubic meters in Italy,” said Kalmikova.
A lot of cheap
However, the introduction of new U.S. plants to produce liquefied natural gas in the next five years will contribute to lower prices for liquefied natural gas, thereby limiting the ability to start other major projects of this sector, said the source from Rystad. Assessing the export potential of the promised U.S. launch capacity they doubt that the price of LNG on the global market will rise above $8 per million BTU, which is equivalent to the full value of the costs for these projects.
“LNG projects are located away from infrastructure, it can be difficult to reduce costs below this level. The Russian Arctic projects require huge investments, are also vulnerable,” Rystad.
Agrees and Dmitry marinchenko, which does not exclude the possibility that investment decisions on new potential LNG projects in Russia could be delayed. “Companies may be harder to find buyers willing to enter into long-term gas purchase contracts on favorable terms, as well as investors,” – he waits.
At the same time, the project “Yamal LNG”, implemented by the company “NOVATEK” in consortium with French Total and Chinese partners, will remain competitive even at low gas prices, I’m sure marinchenko. “Almost all of the contracted and tied to the price of oil, while its production costs, in our estimation, one of the lowest in the world,” he knows. LNG will be delivered via the Northern sea route. The first batch should be shipped before the end of 2017.