Economics of LNG.

[rQuestionEngineering]

Cost of natural gas is $2.80/mmbtu (1) . Japan is importing at $12.01/mmbtu (2). The difference is shipping cost ?

(1)

http://www.infomine.com/investment/metal-prices/natural-gas/1-year/

(2)

https://ycharts.com/indicators/japan_liquefied_natural_gas_import_price

 

[rotw]

- Both links refer to price not cost;
- There is distinction between natural gas and LNG; you can think of LNG as "delivery method" at the end.
- The natural gas prices are not provided with a reference to hub, etc. At least it is unclear. I would consult a renowned source such as Platt's or equivalent to analyze further the difference.

For sure the cost of liquefaction is included in the LNG price so is the transportation cost for pipeline natural gas (which is subject to economy of scale factor). Japan is notorious for being an important importer of LNG, they do not seem to have so many options there. Furthermore they have a lot of regasification terminals so the infrastructure is completely compatible with this mode of supply.

 

[LittleInch]

The gas price looks like Henry hub price to me, .e. delivered somewhere in Louisiana.

you then need to liquefy it via a very expensive plant which needs to be paid for by throughput of LNG and then ship it halfway across the world on expensive vessels which also need to be paid for.

Japan is also suffering from the loss of all their nuclear reactors so demand for LNG has increased and global prices also tend to mirror Oil prices to a certain extent.

Lowest was about $6. MMBTU and has been climbing ever since.



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[MortenA]

So here you have one of the reasons why american economy is doing so well, and energy intesive production moving back to USA: Very cheap energy compared to many other places (such as Japan and Europe)