Qatar, US Face Off at LNG Exporters Panel
Panelists representing Qatari and US LNG export ventures outlined at an LNG conference in Lisbon November 29 their different plans for being the most cost-competitive producers and suppliers into the 2020s. Both have enviably cheap feedstock gas compared with some other projects – particularly those in Australia, set soon to be the world's biggest exporter, at least in terms of nameplate capacity – but that is not the only factor affecting the cost.
A merger of two of the largest LNG companies, RasGas and Qatargas, is on target for completion during December, which will create some synergies. The merger, announced earlier this year by their majority shareholder Qatar Petroleum, is on course to take effect from January 1, the interim head of RasGas’s marketing and shipping Ali Khalaf al-Kaabi told delegates at the CWC event.
Referring to QP’s declaration in April that it wants to expand LNG production from 77mn mt/yr now to 100mn mt within five to seven years, al-Kaabi said the rationale was to focus on keep production costs to a minimum. Most international majors are keen to explore what role they might play in QP’s planned expansion, if implemented.
Al-Kaabi said Qatargas/Rasgas can provide flexibility to customers, because of positions that it has in import terminals – which he said could give it an edge in existing and new markets – and cited the OceanLNG joint venture with ExxonMobil as a way that QP had diversified into portfolio sales, further trimming costs.
The CEO of US LNG projects developer Tellurian Meg Gentle however told the same conference that her company means to keep US LNG the most competitive supply into world markets, with one of its projects is aiming for an installed cost of $550/metric ton/yr of LNG. “We believe we can supply LNG at $3/mn Btu free on board in the US, which means it’s deliverable into Europe at $3.50/mn Btu,” she told delegates.
Asked by the moderator if that also meant deliverable into Asia at $4.50/mn Btu, Gentle concurred. She also noted that several would-be buyers are wary of locking into Henry Hub prices on a 20-year basis, and outlined how potential equity investors in its Driftwood LNG project could – for a $1.5bn capex investment – receive a 1mn mt/yr guaranteed offtake for the life of the plant. Gentle added that the US could see production from major shales rising by 30bn ft³/d in the coming years which could all be supplied on a "very cost-competitive basis.
Eric Bensaude, managing director, commercial operations at Cheniere Marketing, said that 200 cargoes had been delivered from its Sabine Pass trains to date, of which about 40% to Latin America, 33% to Asia, 13% to Middle East and the rest to Europe. Its vessels had made 75-77 transits through the Panama Canal: "They make every effort to make the canal available." Bensaude said Corpus Christi train 3 and Sabine 6 were “shovel-ready” with a final investment decision due shortly.
Tellurian knows a lot about Cheniere's business model, as Gentle and other senior executives used to work there.