Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
What to Expect at a Critical Stock Market Point: End of a Wave 2 Rally - 26th Apr 18
A New Lithium War Is About To Begin, Modern Gold Rush! - 26th Apr 18
Silver, silver, and silver! There’s More Than Silver, People! - 26th Apr 18
How to be Financially Prepared When Purchasing Your First Home - 26th Apr 18
Is a Stock Market Crash Imminent or Does this Stock Market Bull Still Have Legs - 25th Apr 18
Gold Price Focusing on May Cycle Bottom - 25th Apr 18
Cash “Vanishes” From Bank Accounts In Ireland - 25th Apr 18
Is the Malaysian Economy a Potemkin Village - 25th Apr 18
Land Rover Discovery Sport Rattling / Knocking Sounds From Car Pillars - 25th Apr 18
China Takes the Long View on Gold-Silver... and So Should You - 25th Apr 18
Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves - 24th Apr 18
Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - 24th Apr 18
CRYPTOCURRENCY MASTERCLASS #CRY90 - 24th Apr 18
UK Gambling Statistics - What the Numbers Say - 24th Apr 18
Chaos Capitalists Short Countries - How Chanos Got China Wrong - 24th Apr
Artificial Intelligence Defines the Political News Narrative - 24th Apr 18
Stock Market "Oops, They Did It Again" - 24th Apr 18
Fox in the Henhouse: Why Interest Rates Are Rising - 23rd Apr 18
Stocks and Bonds, This is Not a Market - 23rd Apr 18
Happy Anniversary Silver Investors! - 23rd Apr 18
The Hottest Commodity Play In 2018 - 23rd Apr 18
Stock Market Correction Turns Consolidation - 23rd Apr 18
Silver Squeeze, Gold Fails & GDX Breadth - 23rd Apr 18
US Economy Is Cooked, the Growth Cycle has Peaked - 23rd Apr 18
Inflation, With a Shelf Life - 23rd Apr 18 - Gary_Tanashian
Stock Market Predictive Modeling Is Calling For A Continued Rally - 22nd Apr 18
SWEATCOIN - Get PAID to WALK! Incentive to Burn Fat and Lose Weight - Review - 22nd Apr 18
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

How LNG Exports Almost Bankrupted Australia, Is the U.S. Next?

Commodities / Natural Gas Oct 19, 2014 - 12:57 PM GMT

By: Money_Morning

Commodities

The world’s leading liquefied national gas (LNG) exporter is the tiny Arab kingdom of Qatar, whose 77 million tons per year (mtpy) account for 30% of global LNG exports.

When the U.S. begins exporting massive quantities of LNG in 2015, it will immediately be catapulted into a position as one of the world’s largest exporters as well.


But the U.S. won’t be No. 2. In fact, the current second largest LNG exporter is poised to take over the No. 1 spot this decade.

It happens to be a country on the other side of the world from the Middle East. And it’s about to leave Qatar (and the U.S.) in the dust.

Unless its domestic customers go bankrupt first…

Big Profits in LNG Exports

We think of the Middle East as almost one giant oil field, but the reality is that Arab nations also produce a significant portion of the world’s natural gas.

Nowhere is that more true than Qatar, a nation of 2,045,000, or about the population of New Mexico, crammed into a land mass the size of Connecticut.

For such a tiny country, it produces a surprising amount of energy, so much that natural gas and oil exports account for 60% of the country’s economy, according to the U.S. Energy Information Administration (EIA).

Its LNG exports of 77 million tons per year (mtpy) from 14 processing plants, known as “trains” in the industry, have made it the world’s largest LNG exporter since 2006, though a current moratorium will “freeze” its current output.

Australia plans to take that No. 1 spot away as soon as 2017, and export 85 mtpy in 2017 and 100 mtpy by 2020, according to government resource officials.

If it succeeds, its citizens will pay a terrible price.

In fact, they already are.

In its rush to capitalize on Asia’s insatiable demand for natural gas, which skyrocketed when Japan shut down its nuclear reactors in 2011, Australia began exporting the majority of its natural gas earlier this decade. Today, 75% of the natural gas produced in Australia is exported.

Asia’s willingness to pay two and three times what Australia’s domestic customers were paying for natural gas made the move a no-brainer for the country’s energy companies. And as the only natural gas producing country with no controls or limits on exports, according to DomGas Alliance, a consortium of Australian energy companies, there was nothing to stop them.

The consequences were predictable. With domestic supplies falling, prices rose to match the much higher export prices. After all, why should an energy company sell gas cheaper to domestic customers?

The average Australian household now pays three times more for natural gas than it did at the beginning of the decade.

According to Wood MacKenzie Ltd., an energy research company, wholesale purchasers in eastern Australia had been paying A$3 ($2.67) to A$4 per million British thermal units on average over the past decade. Now those prices are A$9 to A$10 per million Btu.

“Australia’s east coast gas market is now linked to Asian markets through its LNG export projects,” said Chris Graham, an analyst at Wood Mackenzie.

The result, University of Queensland energy analyst Dr Liam Wagner predicts, “In the future we’re going to have less gas because it’ll be far more expensive to burn it here and the gas producers will be able to make more money overseas.”

And it’s not just Australian homeowners who are suffering from higher prices. Manufacturing plants are closing, planned expansions are put on hold, and new plant projects are being cancelled, because of rising fuel costs.

Meanwhile, Australia has five new LNG export terminals due to open within the next year, and four more planned for 2016-2020. Without government export controls, Australia’s domestic customers will continue to see large price increases, even as production rises to make the country the world’s export leader well before the end of the decade.

Will U.S. Exports Cause Natural Gas Prices to Jump?

With the U.S. scheduled to begin exporting large quantities of LNG starting next year, will U.S. customers see the same large increases in natural gas prices?

Industry analysts say no.

For one thing, the U.S. extracts approximately 30 trillion cubic feet of natural gas every year, about 15 times what Australia produces.

The second factor is that even when the four LNG export terminals the federal government has approved are fully operational, the U.S. will, at most, only export 10% of what it produces.

In an ironic twist, one of those facilities was built in Sabine Pass, Texas, three years ago by Qatar, which planned to import natural gas into the U.S. In conjunction with Exxon Mobil and Conoco Phillips, Qatar and its partners want to spend $10 billion to convert into an export terminal.

When U.S exports begin begins in earnest, companies like Cheniere Energy Inc. (NYSE MKT:LNG) will be mainstays in a huge move of American-produced natural gas abroad.

Here’s why.

Cheniere has locked in major 20-year export contracts from its terminals on the Gulf Coast. That explains why Cheniere, without having yet produced a single drop of LNG for export, has been on a tear.

Cheniere is up 42% since the first of the year, and 293% in the past two years. In the short term, the stock is affected by the movement of the energy market overall, but in the long-term the company’s lead in natural gas exports gives it a huge potential upside.

PS: Meanwhile, another “war” over a precious commodity is unlocking big opportunities for investors. Learn more here.

Source : http://oilandenergyinvestor.com/2014/10/lng-exports-almost-made-australia-bankrupt-u-s-next/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules