•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    Deloitte studies the global impact of US LNG exports

    Deloitte has just released a new economic analysis estimating the potential worldwide economic impact of US LNG exports titled, “Exporting the American Renaissance: Global impacts of LNG exports from the United States.”

    The study says that global price and geopolitical implications of US LNG exports could be much more dramatic than any US price increase, including possibly hastening the transition away from oil price indexation of gas supply contracts.

    In a few short years, the Shale Revolution has created a 180-degree shift in thinking. Prior expectations that the US would become a major importer of LNG have been replaced by the possibility that the US will become a major LNG exporter. This is all due to the abundance of exploitable natural gas from unconventional resources, such as shale formations.

    North American natural gas prices collapsed from more than $10/MMBtu in 2008 to less than $3/MMBtu at times during 2012. However, gas prices in Asia and Europe remain high, creating huge price spreads from the US. These large price spreads have enticed foreign buyers seeking lower-cost gas to consider US supplies, while US producers are salivating at the opportunity to sell to foreign markets.

    Other US LNG export studies have focused on impacts to the US from exporting natural gas. However, this Deloitte MarketPoint analysis examines how exports might alter the economic balance in global natural gas markets, as well as potential price impacts, gas supply changes, and flow displacements, if the U.S. were to export a given volume of LNG to Asia or Europe. Key questions addressed in this report include:

    ·         How could US LNG exports affect prices in the US and global markets?

    ·         How much could price spreads narrow as a result of US LNG exports and other market developments?

    ·         Which countries win and lose from US LNG exports?

    ·         What future natural gas projects might be displaced?

    ·         How could a more competitive global LNG market that is less dependent on oil-indexed gas prices affect projected results?

    The global price and geopolitical implications could be much more dramatic than any US price increase, including possibly hastening the transition away from oil price indexation of gas supply contracts.

    The study scenarios show complex market dynamics and clear economic impacts with potential geopolitical implications, including:

    ·         US LNG exports could hasten the transition away from oil price indexation of gas supply contracts.

    ·         Prices are projected to decrease fairly significantly in regions importing US LNG, but only marginally increase in the US.

    ·         US LNG exports are projected to narrow the price difference between the US and export markets and hence, the market will likely limit the volume of economically viable US LNG exports.

    ·         US LNG exports are projected to provide an economic benefit to gas importing countries.

    ·         Gas exporting countries could suffer a decline in trade revenue due to price erosion and/or supply displacement.

    ·         US LNG exports could also displace some oil consumption through increased gas-fired electric power generation.

    For more information about the study, visit www.deloitte.com/energysolutions.

    Most Popular

    Related Articles

    Surging Saudi oil production is driving oil prices lower

    08/10/2015 Since June 23, when West Texas Intermediate crude closed at $61/bbl, oil prices have been in meltdown mode, say Raymond James analysts, who, in a recent report, have commented on effects of the cur...

    Diversity lags in oil industry

    08/07/2015

    Having diversity on corporate boards helps prevent 'group think.'

    Quantifying political risk

    08/07/2015

    New PRIX index analyzes political risk in oil markets

    EXCO receives continued listing standard notice from NYSE

    08/04/2015 EXCO Resources Inc. was notified on July 30 by the New York Stock Exchange (NYSE) of its noncompliance with continued listing standards because the average closing price of its common shares over a...

    ICIS licenses BFOE benchmark data to ICE Futures Europe for compilation of the ICE Brent Index

    08/04/2015 ICIS, a market information provider, is licensing its crude oil BFOE benchmark data to the ICE Futures Europe to be used in the compilation of the ICE Brent Index.    

    Atlantic Petroleum to explore strategic alternatives

    08/03/2015 P/F Atlantic Petroleum’s board of directors has authorized the company's management team to explore a range of strategic alternatives to further enhance shareholder value. Pareto Securities AS has ...

    More Oil & Gas Financial Articles

    Surging Saudi oil production is driving oil prices lower

    Mon, Aug 10, 2015

    Since June 23, when West Texas Intermediate crude closed at $61/bbl, oil prices have been in meltdown mode, say Raymond James analysts, who, in a recent report, have commented on effects of the current surging supply of oil from Saudi Arabia, Iran, and Iraq.

    Diversity lags in oil industry

    Fri, Aug 7, 2015

    Having diversity on corporate boards helps prevent 'group think.'

    Quantifying political risk

    Fri, Aug 7, 2015

    New PRIX index analyzes political risk in oil markets

    EXCO receives continued listing standard notice from NYSE

    Tue, Aug 4, 2015

    EXCO Resources Inc. was notified on July 30 by the New York Stock Exchange (NYSE) of its noncompliance with continued listing standards because the average closing price of its common shares over a period of 30 consecutive trading days had fallen below $1.00 per share, which is the minimum average closing price per share required to maintain listing on the NYSE.

    ICIS licenses BFOE benchmark data to ICE Futures Europe for compilation of the ICE Brent Index

    Tue, Aug 4, 2015

    ICIS, a market information provider, is licensing its crude oil BFOE benchmark data to the ICE Futures Europe to be used in the compilation of the ICE Brent Index.

     

     

    OGFJ photo of the day


    Click to view slideshow

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ