Insight
Decision to Lift: factors shaping US LNG offtake
Report summary
US LNG exports have accelerated over the past year. Capacity at Sabine Pass Phases 1 & 2 will reach 2.5 bcfd (18 mmtpa) by mid-2017, and attention is now shifting to the buyers and their offtake decisions. The short-term outlook raises uncertainties around capacity utilisation. The LNG market is oversupplied in the short-term, raising questions around utilisation. For the project's key customers—Shell, GNF, KOGAS, GAIL, Total and Cheniere—we assess their cost structures and portfolio balances, market dynamics and other factors likely to shape decision-making. This will be important to understand as other US facilities come online and more buyers are faced with similar choices in the years ahead.
Table of contents
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Four buyers hold 90% of capacity at Trains 1-4
- Shell has more than a third of Phase 1 & 2 capacity
-
Sabine Pass offtakers are over-contracted in the short-term
- Cash costs of US LNG will be lower than long-term oil-indexed contracts
-
Cash costs of supplying into Europe
- FOB costs and TOP terms
- Shipping costs
- Portfolio optimisation
- Regas & market entry costs
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Volumes at risk in the short term
- Q2/Q3 2018 could 'stress test' the economics of US LNG
- US LNG could flow even at negative cash margins
- Cumulative impact
Tables and charts
This report includes 4 images and tables including:
- Sabine Pass – contracted capacity by offtaker (2016 – 2018)
- Offtaker Global Portfolio Balances and Costs (2018)
- Cash costs of supply to northwest Europe: premium to Henry Hub*
- Range of cash costs of US LNG to Europe (premium to Henry Hub) vs forecast NPB – Henry Hub differential*
What's included
This report contains:
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