Tuesday, December 8, 2009

UK Spot Gas Now Less Than Henry Hub

I've been following the natural gas supply glut drama in both the U.S. and the U.K. lately.  Yesterday's headline was that the spot gas price in the U.K. fell to 30 pence/therm, the first time it has ever gone below the U.S. Henry Hub spot price (don't ask me to do the pence/therm to $/MMBtu conversion - I'll just trust Merrill Lynch and the Financial Times).

The supply glut in Britain is linked to the influx of LNG that can't find a home in North America.  Qatar quickly has gone from zero to the second largest supplier of gas to the U.K. in a year.  The problem grows worse as other countries expand LNG export capacity.  Most troubling is that the two countries that could soak it up, India and China, have inadequate LNG import infrastructure.  Now there's a business opportunity if you've got a couple billion dollars burning a hole in your pocket!

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