The diseconomics of long-haul LNG trading

Journal Article · Sun Dec 31 04:00:00 EST 1995 · Journal of Energy and Development

OSTI ID:401728

Stauffer, T R

Long-haul liquefied natural gas (LNG) exports yield little or no economic rent. Trades, such as Borneo to Japan, are economical, but government takes otherwise are minimal. Today, the price of LNG is capped by the technical option of modifying gas turbines to bum liquid fuels. The maximum premium for LNG is less than 50 cents per thousand cubic feet (/Mcf), and buyers are resisting any price above oil parity. Costs of LNG are high and increase with distance. The netback value is zero or even negative for the longer-distance trades. The value of extracted co-products (natural gas liquids) is 50 cents to $1/Mcf. These credits are the principal source of profit, especially for foreign partners because natural gas liquids are taxed at low {open_quotes}industrial{close_quotes} rates. Returns are even less when the gas supply is nonassociated so that the project must {open_quotes}pay{close_quotes} the production costs as well. Some exporting countries profit; but the Organization of the Petroleum Exporting Countries as a whole looses because low-revenue LNG energy displaces at the margin fully taxed oil.

• OSTI ID: 401728
• Journal Information: Journal of Energy and Development, Journal Name: Journal of Energy and Development Journal Issue: 2 Vol. 20; ISSN 0361-4476; ISSN JENDD2
• Country of Publication: United States
• Language: English

Related Subjects

03 NATURAL GAS
29 ENERGY PLANNING, POLICY, AND ECONOMY
ECONOMIC ANALYSIS
EXPORTS
LIQUEFIED NATURAL GAS
MARKETING