The impact of LNG market realities on T&T today

In 2014 as the oil price collapsed the initial T&T government response was don’t worry we are a gas based economy then they blinked in January 2015. It is apparent that the initial boast was based on the expectation that Asian LNG prices would continue to be the highest in the world and given the export of LNG from Train 4 to Asia and the different taxation structure governing train 4 the spending spree would have continued with borrowing and sale of state assets to bolster gas revenue. That expectation has proven to be delusional up to the first quarter of 2015. Too much supply chasing lower demand has depressed the LNG price in Asia to below USD 10 per MMBtu and with an estimated shipping cost of USD 2.80 per MMBtu from Trinidad to Japan and the other blows taken from transfer pricing the T&T government’s expected take has taken a grave hit. There is so much supply out there that LNG exports to Maryland and Massachusetts, USA are now booming as suppliers are now willing to take what they get in order to sell their loads. Continuing low demand will soon result in LNG stored in LNG tankers offshore whilst markets are sought. The reality of Asia is the stream of new capacity that is being switched on in close proximity to the Chinese, Japanese and South Korean markets of Asia in Australia, Papua New Guinea and Sakalin, Russia. The price trend of the first quarter of 2015 is now set and this is an election year in which the spending envisaged necessary to winning the next election has already started. The crunch comes when the first quarter taxes become due from the energy companies are due and the ruling politicians see what is due to the government in living colour. Then the mad scramble becomes paranoid delusional. The mad scramble has already commenced on the supply side of the LNG market as with the oil market. Passive players as T&T in both markets simply get played. So much for de-colonisation. Click on the links and read the good news of what is going on in the LNG markets in the 1st quarter of 2015.

http://finance.yahoo.com/news/global-lng-prices-slide-supply-180138190.html;_ylt=AwrBEiGO9bxU8mgAW.7QtDMD

http://www.bloomberg.com/news/2015-01-19/lng-to-snap-4-year-run-as-sub-10-price-seen-amid-oil-s-decline.html

https://ca.finance.yahoo.com/news/platts-jkm-february-delivered-lng-103000491.html

http://www.worldoil.com/Oil-plunge-boosts-US-natural-gas-imports-to-five-year-high.html

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