article in the australian today, page-3

this an interesting article.
-so Aust largest LNG supplier to Japan.
-Aust #7 cheapest LNG supplier to Japan (at time of survey)out of the 21 suppliers to japan.
-Japan purchases 70% of Aust LNG produced
-Aust supplies 18.2% of japanese LNG market
-japanese demand for LNG up 11% on last year

But not sure if pricing figures are comparing like for like?
says "...the average cost of LNG exported by Australia to Japan was comparatively low, at $US15.96 per million British thermal units. US gas -- only a small amount of which can be exported to Japan under current US rules -- was slightly cheaper at $US15.76...."

so that is situation at time of survey. But that US cost would not represent the export price were US able to export LNG based on current US gas prices???
So perhaps they really need to compare US LNG prices based on what the US could NOW export LNG for?

Interestingly, LNG from Qatar more expensive than Aust LNG.

Whilst they quote domestic US gas prices at $3.50 mbtu (which I think is around a 1gj) they are not comparing like for like.

As I understand it, that $3.50 probably represents the price of gas at the gates of the LNG processing plant? So it would include transport costs to the plant?

But then you would have to add significant processing costs gas->LNG, then transport to Japan, plus everyone's margins.

Then others say once US starts exporting LNG to Japan, that will cause competition for supply of US gas, which will put pricing pressure on US gas prices.

The point of all of this, is that following on from article posted yesterday, the prospect of a Mitsui or Petro or others grabbing WCL as a turn-key operation, and processing the gas thru F/L, simply MUST be attractive.

If the buyer of WCL produces the gas, supplies it for Tolling at F/L, then Offtakes the resultant LNG and supplies the LNG to its own customers - just how many middlemen would that eliminate?
Except for the processing/tolling fees, virtually all of the profits would flow to a Mitsui or a Petro or whoever.

any views?

wonder what the holdup is?

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http://www.theaustralian.com.au/business/mining-energy/cheap-aussie-gas-supplies-dominate-japans-market/story-e6frg9df-1226592769103

Cheap Aussie gas supplies dominate Japan's market

by:RICK WALLACE, Tokyo correspondent
From:The Australian
March 08, 201312:00AM

AUSTRALIA has vaulted ahead of Qatar to become the largest single source of LNG to energy-starved Japan for the first time.

And new figures show that despite complaints from Japanese utilities about the costs and worries over project blowouts, Australia was cheaper than all but six of the 21 suppliers of gas to Japan.

The figures will be welcomed by Australia's LNG industry during a time of rising uncertainty as Japan, Korea and other large buyers strive to win approval to import shale gas from the US to cut their energy bills.

At the same time, high wages and environmental sensitivities are driving up the cost of production in Australia and placing projects in the $175 billion pipeline of LNG proposals in jeopardy.

Japan has long been by far the biggest buyer of Australian LNG, purchasing 70 per cent of exports.

Overall, according to the Ministry of Finance figures, Australia captured 18.2 per cent of the Japanese market, exporting 15.9 million tonnes in calendar year 2012. Most came from the North West Shelf field with some from Darwin LNG and the Pluto project.

Qatar and Malaysia filled the next two spots, exporting 15.6 and 14.6 million tonnes.

The figures show Japanese demand for LNG has soared in the wake of the Fukushima nuclear disaster with imports of 87.3 million tonnes last year, up more than 11 per cent on the year before.

The main surprise in the figures was that the average cost of LNG exported by Australia to Japan was comparatively low, at $US15.96 per million British thermal units. US gas -- only a small amount of which can be exported to Japan under current US rules -- was slightly cheaper at $US15.76.

The most costly gas landed in Japan from the major suppliers came from Equatorial Guinea, Malaysia, Indonesia and Egypt. Australia's main rival -- Qatar -- sold its gas for an average of $17.42 per million BTU in Japan.

Resources and Energy Minister Martin Ferguson said he was pleased to see Australia had become Japan's top supplier, but he remained concerned about project development costs.

"The major challenge for Australia's broader natural gas industry is to deliver projects on time and on budget. This will be critical to us remaining internationally competitive, particularly in light of challenges from existing gas exporters and emerging sources of LNG supply, such as Russia, East Africa and the US," he said.

Amid soaring trade deficits, Japan has vowed to break up the current oil-linked pricing system for the Asian market and replace it with a price linked to US domestic pricing, if it wins approval from the US to receive shale gas shipments.

The US domestic price is hovering around $3.50 per million BTU.

Japanese utilities say that they could liquefy and import this gas for a price 30 per cent cheaper than Australian gas.




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