LNG price sensitivity OIL-LINKED CONTRACTS AND PROXIMITY OF LNG EXPORT FACILITIES TO THE HENRY HUB IMPACT ARBITRAGE OPPORTUNITIES

摘要

AMERICANS, ESPECIALLY those involved in the energy industry, will be hearing and reading a lot about LNG in the coming years. Demand for liquefied natural gas (LNG) is projected to grow at a 6% compounded annual rate until 2025. LNG projects are usually built by obtaining proj ect financing. Lenders require long-term contracts (SPAs) from creditworthy gas buyers to ensure that project revenues will be sufficient to repay the debt obligation. Pricing of LNG in 20-year, long-term contracts has always been linked to an energy index or group of indices, based on the geographic location of the LNG buyer. As the index price changes, LNG price changes correspondingly. US LNG liquefaction projects are offering Henry Hub-linked LNG pricing, which is a relatively new pricing index for buyers. This article is written to suggest an optimal LNG pricing index to Asian buyers between Henry Hub and the oil index, as Asian buyers traditionally had LNG purchases linked to the oil index. Pricing mechanisms associated with Asian buyers are prominent, as Asian countries are the worlds largest importers of LNG.