US Shale gas LNG enters the Caribbean: 4th quarter 2015

Cheniere Energy the creator of the Sabine Pass LNG manufacturing complex in the US is in the Dominican Republic to finalise plans to place 1 million tonnes of shale gas LNG in the DR per annum commencing the 4th quarter 2015 from its Trains 1 and 2. BG Group and Gas Natural Fenosa amongst other contracted buyers have taken up 16 million tonnes of the 18 million tonnes of the projected annual production of Trains 1 to 4 at Sabine Pass. Apparently Cheniere is placing LNG production that it did not contract out to buyers and the DR is marked as a market for US produced Sabine Pass LNG. A February 20, 2015 report in the Dominican Today stated that 1 million tonnes per annum of US LNG will sell for RD$ 8.00 per MMbtu plus terminal fee. As at February 20, 2015 the exchange rate was 1 USD equals RD$ 44.55 do the math to get the US price per MMbtu. Given the accuracy of the online news report it is now apparent that LNG will become a geo-political instrument in the Caribbean in 2015 and given the model adopted in T&T governing the monetisation of our gas reserves we are by-standers to the affair whilst our national interests are potently assailed. This scenario in the DR is not the entire reality as Crowley is moving to supply US LNG into Puerto Rico for delivery to the end users via new technologies pioneered in the US. Cheniere and Crowley are then moving to dominate specific segments of the market. Cheniere has entered the DR LNG market where T&T LNG is already sold to an electricity generator and seized market share that should have gone to T&T producers whilst Crowley is moving to supply users previously of no interest to LNG producers. The new energy order is then apparent and in this order T&T is trapped in a time warp created by politicians and compliant technocrats. For the week ending February 20, 2015 the LNG price in Asia remained at USD 6.70 per MMbtu where thin trading  was the norm influenced by the New Year Holiday. Remember I posted earlier the cost per MMbtu for transporting T&T LNG to Asia. It was reported that LNG from T&T has no choice now but to chase the European premium but so are the other producers as Qatar floods this market with product. The lesson in this for T&T is that the expected revenues from Train 4 will reflect this Asian reality as double digit prices per MMbtu for LNG in Asia is now a memory. This reality will become clear as the 1st quarter winds down and the revenue take is added up. But the contraction in the retail economy is clear since Christmas 2014. Political propaganda cannot trump deprivation.

http://www.dominicantoday.com/dr/economy/2015/2/19/54268/Top-US-natural-gas-supplier-to-start-imports-in-October

http://finance.yahoo.com/news/global-lng-asia-languishes-behind-130041861.html;_ylt=AwrBEiIqRudUkSAAo2TQtDMD

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