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U.S. To Export Liquefied Natural Gas To Taiwan

U.S. To Export Liquefied Natural Gas To Taiwan thumbnail

French gas group GDF Suez revealed on Friday a giant deal, the first of its kind, to ship liquefied natural gas from the United States to supply Taiwan.

The contract, of undisclosed value, will include natural gas from shale production, and is a sign of huge changes in global energy markets driven largely by the shale energy revolution in North America.

GDF Suez said it had signed an agreement to sell 800,000 tonnes of LNG a year for 20 years from 2018 to Taiwanese company CPC.

The gas would come from the Cameron LNG liquefaction plant in Louisiana state in the southern United States, fed by natural gas from normal and also from shale reserves.

Company vice president Jean-Marie Dauger, responsible for global gas operations, said in a statement: “This sales agreement, the first of its kind, will contribute to export natural gas — including shale gas — produced in the US to the global LNG market and will contribute to diversification and security of energy supply.

“It will also be a part of GDF Suez ambition to deepen its role in the Asia-Pacific region and to expand long term supply into a region where LNG demand for the future is high.

“We are pleased to be among the first movers in the export of shale gas from the US and to enter into a long term relationship with CPC and to contribute to the security of energy supply also in Asia.”

The LNG market in Taiwan is one of the biggest in the world. Imports are expected to exceed 12.5 million tonnes this year, about the same as in 2013.

Asia is seen as offering great potential to exporters of gas. Prices there are more than 50.0 percent higher than in Europe and are twice or even three times the level in the United States.

Asian demand has been boosted by the halting of production from nuclear energy plants in Japan and by economic growth which drives up demand for energy.

Liquefied natural gas is gas which has been cooled to very low temperatures so that it becomes liquefied for transportation in tanker ships.

On arrival at its destination, most of the liquid is then turned back into gas for injection into local gas distribution networks.

GDF Suez, the third-biggest importer of LNG, is a leading operator on this market, operating a fleet of 14 tankers and transporting 16 million tonnes of LNG per year.

French gas group GDF Suez revealed a giant deal, the first of its kind, to ship liquefied natural gas from the United States to supply TaiwanFrench gas group GDF Suez revealed a giant deal, the first of its kind, to ship liquefied natural gas from the United States to supply Taiwan

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9 Comments on "U.S. To Export Liquefied Natural Gas To Taiwan"

  1. ghung on Fri, 28th Mar 2014 7:23 pm 

    Sempra Energy/ Sempra International (Cameron’s parent) will get a double dip out of this. It’ll sell gas on the world market at higher prices, and it’ll be able to charge it’s SoCal customers higher rates as this drives up domestic prices. They’ll’ll have to charge more for the electricity they produce as well. What’s not to like?

    I’m sure the US will find an extra 800,000 tonnes somewhere to offset these exports, likely via imports. I suppose Sempra will get a piece of that action as well. Good business is where you create it.

  2. rockman on Fri, 28th Mar 2014 7:25 pm 

    FYI – The Cameron LNG plant does not exist. It will cost about $6 billion and be completed in 3 or 4 years. It will not be liquefying shale gas per se. It will be drawing NG from the Henry Hub where the NG is not distinguished as to source. Most of the NG coming into HH is not from shale wells. The MSM just likes to throw in the term “shale gas” whether it’s actually pertinent to the story or not. LOL. Besides already having some infrastructure in place there’s an even more important reason to locate in Cameron Parish: it’s where NG can be picked up from the Henry Hub.

    No one is going to invest $6 billion in an LNG plants unless they have a guaranteed buyer for that 20 contract. But no buyer is going to sign a contract for a 20 year purchase unless the seller can guarantee they’ll have the LNG to ship for the next 20 years. Thus the need for HH: they can buy a 20 year futures contract. Of course, no one knows what the price of NG will be in 5 years let alone 20 years. So I suspect this contract is written similar to the one that Chenier signed with a Brit utility: the LNG will be priced at HH + a built in processing cost + profit margin.

  3. Nony on Fri, 28th Mar 2014 7:50 pm 

    How many MCF in a tonne?

  4. Nony on Fri, 28th Mar 2014 7:51 pm 

    I tried googling, but was confused. Is an MCF a million cubic feet or thousand?

  5. rockman on Fri, 28th Mar 2014 8:16 pm 

    1 million metric tons LNG = 48.7 billion cubic feet NG.

    I’ll let you design your own conversion factor

    MCF = 1,000 cubic feet. MCF is the common metric for NG in the US. 1 MCF costs about $4.50 these days

  6. Nony on Fri, 28th Mar 2014 8:28 pm 

    800,000 tonnes * (48,700,000,000 CF/1,000,000 tonnes)* (1MCF/1000 CF)=

    38,960,000 MCF

    Figure $10/MCF, that’s about $400 million/year revenue.

  7. Nony on Fri, 28th Mar 2014 8:29 pm 

    I used a higher price, given the export market. Of course there are extra costs too (liquification, shipping, expansion) along with the capital costs.

  8. rockman on Sat, 29th Mar 2014 12:42 am 

    Here’s some numbers from:

    Economic: Cameron LNG estimates that the liquefaction project customers will export an average of approximately $8.6 billion of LNG per year, and oil and natural gas liquids production is expected to average $2.2 billion—averaging total trade balance benefits of $10.8 billion per year based on 2011 dollars.

  9. Nony on Sat, 29th Mar 2014 2:45 pm 

    Thanks Rock. I guess if you figure 10 billion/year and that my math is reasonable, then they’re at 4% of capacity based on that order. Maybe 6% if you go to $15 gas. Nice order, but doesn’t fill the plant.

    BTW, I’m confused on your numbers. Is that just for this facility or nationwide? Why is the 8.6 added to the 2.2 (is contract a markup after US price)? P.s. Your link just takes me back to right here.

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