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Cheniere on track for LNG shipments starting in January

Cheniere will not replace Russia as the dominate source of gas in Europe, according to Cheniere (ticker: LNG) CEO Charif Souki. Cheniere, which is headquartered in Houston, is expected to start liquefaction at its Sabine Pass liquefied natural gas (LNG) export terminal in Louisiana. The terminal will begin exporting cargos “sometime in January,” Souki said at the Singapore International Energy Week.

Export production volumes at its Sabine Pass export terminal are expected at 27 million metric tons per annum (mmtpa), a number set to rise to 60 mmtpa by 2025. The amount of LNG Cheniere will be able to export has some wondering if the U.S. company could offset Europe’s reliance on Russian gas. Gazprom (ticker: OGZPY), Russia’s state-owned gas exporter, accounts for about 30% of Europe’s gas supply.

Worsening political ties between Russia and the West have caused concern over Europe’s reliance on Russia for its natural gas. Russia is turning more towards Asian markets, but experts told Oil & Gas 360® that the pivot east will likely be smaller than anticipated, and Gazprom will remain a major player in Europe. And Souki agrees that Russia will remain the primary source of gas to Europe as well, reports CNBC.

“Russian gas will still be the dominant player in Europe,” Souki said in Singapore. “Cheniere’s entry into Europe won’t dent [LNG] prices there…I don’t see us as price makers.”

Russia, LNG

Source: Dr. James Henderson and Dr. Tatiana Mitrova; LRMC: Long-run marginal cost, SRMC: Short-run marginal cost

Despite the probability that Cheniere will not unseat Russia as Europe’s largest supplier, European nations are already courting Cheniere in an attempt to wean themselves off Russian supply. Earlier this month, Lithuania’s Energy Minister Rokas Masiulis announced the country was in talks with Cheniere regarding potential imports.

“We would love to have U.S. cargo in our region to have competition with Gazprom. But of course negotiations will depend on price terms,” Masiulis said.


Source: Gazprom

Russia raises gas price outlook to Europe by 14% in 2016

The outlook for gas prices to Europe from Russia was adjusted upward by Russia’s Ministry of Economic Development, TASS reported. Gas supplies are projected at $199 per 1,000 cubic meters, 14% higher than the previous outlook of $174 per 1,000 cubic meters.

The outlook for gas supply prices to Europe for the remainder of this year were also adjusted upward by 4.6% to $250 per 1,000 cubic meters, reports TASS. The price previously was $239 per 1,000 cubic meters.

The weighted average price of Russian gas supplies to Europe equals $238 per 1,000 cubic meters at the end of eight months, Deputy Chief Executive Officer of Gazprom Alexander Medvedev said earlier. 158 billion cubic meters of gas are planned to be supplied throughout 2015.

Russia’s gas export will total 170 billion cubic meters in 2015 and 174.7 billion cubic meters in 2016 according to the Ministry of Economic Development’s outlook.

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