Waterborne Energy Analyst Says Recent Cheniere Deal to Export LNG May Be Global Game-Changer

First-of-Its Kind LNG SPA Could Also Be Industry Tipping Point

HOUSTON--(BUSINESS WIRE)--Waterborne, the global leader in monitoring and analyzing LNG markets, believes that the recent deal struck by Cheniere/BG sets into motion a global LNG industry game-changer.

“This deal should move the U.S. LNG export debate to a more pragmatic discourse”

According to Steve Johnson, president of Houston-based Waterborne, “Beyond the immediate and significant material consequences to both Cheniere and BG, this agreement represents a global LNG industry milestone that brings new economic opportunity which was inconceivable just a few short years ago.

“The debate is over with regard to how LNG export will work as the first commercial deal involving the sale of domestically produced natural gas to foreign markets will soon be a reality.”

Waterborne consultant, Lafayette Herring, notes that the publicly disclosed LNG Supply and Purchase Agreement (SPA) between Cheniere and BG offers a remarkable amount of detail of the scope and scale of the economics between the parties, and also reveals vast implications as to the potential impact this and other similar deals will likely have on global energy markets.

“This deal should move the U.S. LNG export debate to a more pragmatic discourse,” says Herring. “One deal signed means reality has arrived and we can assume other similar deals are in the works. Cheniere is authorized by the DOE to export up to 16 mtpa from its Sabine Pass terminal on the Texas/Louisiana border to countries with whom trade is permissible, including non-FTA nations. So, who is next to sign up and when?”

Herring says adding up the current total capacity of liquefaction facilities seeking DOE authorization, and the U.S. could soon be supplying over 70 cargoes a month. This would clearly be a game-changer in global trade.

“More importantly, what will become of the pricing basis for LNG? Henry Hub pricing has been used for some Atlantic Basin trades up until now, however, it has not been commonly used in supply pricing.”

Herring also says one issue requiring resolution is the current constraints of U.S. maritime trade due to restrictions of the Jones Act. “Will domestically produced LNG be precluded from accessing the U.S. LNG terminals,” he wonders.

Further details and analysis are available in the Oct. 27, 2011 edition of the Americas Waterborne LNG Report.

About Waterborne

Waterborne monitors, analyzes and reports on global shipments of Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG). Published since 1982, Waterborne Reports offer subscribers exclusive and comprehensive analysis of LNG and LPG markets throughout the United States, Central and South America, Europe and Asia. Unmatched in the industry for accurate, real-time LNG and LPG data, Waterborne Reports include bimonthly tracking summaries of volume totals by vessel and port, terminal capacities, ownership and expansion news, and more. Headquartered in Houston, Waterborne has offices in Dublin and London; for more information, visit www.waterborneenergy.com or call 713.526.1555.