As low as it gets: cash costs of US LNG
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.