Insight
As low as it gets: cash costs of US LNG
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
On a full life-cycle cost basis, US LNG linked to northwest European spot prices will struggle to find margin at spreads above Henry Hub of less than $5.00/mmbtu, taking into account the full costs of liquefaction, shipping and regasification. But once operational, the plant economics change. Sunk costs become irrelevant to decision making, and US LNG will flow where offtakers can find margin based on cash costs alone. In thinking about US export potential in an oversupplied market, therefore, cash costs are key.
Table of contents
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Executive Summary
- Cash costs will drive US LNG flows
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SPAs vs LTAs
- Sale and purchase agreements (SPAs)
- Liquefaction tolling agreements (LTAs)
- Leveraging cost advantages
- Spot price formation
Tables and charts
This report includes the following images and tables:
- Sunk vs. cash costs of US LNG (FOB)*
- Cash costs of Gulf Coast FOB: SPA vs. LTA contracts*
- Delta between SPA and LTA offtakers cash costs
What's included
This report contains:
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