How are the economics of deal like LNG Canada any different to the economics of a deal like ours?
We are competing with these projects for customers. We need to sign customers like Kogas, Mitsubishi, Petronas and Petrochina who are investment grade bankable customers in order to get bank financing.
Money is money and economics is economics.
Sure the LNG Canada deal is different in that the project customers contribute equity and then take a slice of the project's capacity (much like the equity deal Tellurian is flogging). Also, Petronas has large stranded Canadian upstream gas assets earmarked for Kitimat but now with nowhere to go which Im sure made this deal a lot more feasible. Shell obviously are standing by their commitment using their balance sheet and may sign offtake later for capacity- but this is precisely the type of customer we need to sign to be bankable.
However, the cost to get gas to where they need it needs to stack up against a project like ours. Given the higher costs to build- what is about this LNG Canada offering that made it more attractive for these customers to sign rather than coming in with us? Pricing? The shipping advantage? What can we learn about FID being taken on this massive project that means we sign the next deal. At the very least, its the first FID on a major project in four years so customers are willing to invest and to commit and are bullish re long term gas supply. No more macro excuses GV.
Its all and easy to say oh management arent shell or arent Qatar or arent Souki but ultimately these are our competitors and we are playing with the big boys.
