Friday, April 3, 2009

More on LNG

There was a brief but interesting article in Platts about LNG and the possibility that LNG storage in the U.S. might fill up by the end of summer. The article featured comments by the CEO of LNG importer Cheniere Energy Charif Souki.

Souki notes that there were a number of technical issues in 2008 that kept LNG exports from gas producing nations low. Now that these hurdles have been eliminated, there should be a glut of LNG in the market. Based on rates being offered these days, don't expect the price of natural gas to go much above $4 for the near future. If storage facilities fill up, the oversupply might result in gas prices going as low as $2/MMBtu.

As a result of the LNG glut, oversupply will continue to be an issue, but demand is going to be the driver of recovery. As has been noted over and over again, the price of natural gas isn't going to recover until the economy picks up again.

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