Asia to Receive America’s Shale Gas for the First Time

Preparations are underway to receive first supplies from America’s shale in East Asia, a region that which imports more liquefied natural gas than any other region of the world.

According to an official at tanker owner Maran Gas Maritime Inc. who asked not to be identified because he isn’t authorized by the company to speak on the record, a tanker that loaded liquefied natural gas at Cheniere Energy Inc.’s export terminal in Louisiana is bound for the Far East, reports Bloomberg News. The source said that the exact country and buyer who will receive the cargo has not yet been made clear by the company that chartered the vessel, Royal Dutch Shell Plc.

For a market once pegged as the most likely destination for U.S. shale gas, the shipment to East Asia is a long time coming. Instead, Latin America has been the region where most of the cargoes that have left Cheniere’s LNG terminal since exports began in February have landed. A detailed Bloomberg New Energy Finance analysis showed that with more than half of U.S. LNG export capacity slated to be online by 2020 contracted to Asian buyers, an expansion of the Panama Canal stands to change that.

“The Panama Canal opens an entirely new transit route for Asia, rather than going around South Africa or the Horn. We will see more of this in the future,” Ted Michael, an LNG analyst for energy data provider Genscape Inc., told Bloomberg News by telephone from Boulder, Colorado.

After becoming the first LNG carrier to pass through the newly expanded Panama Canal locks, shipping data compiled by Bloomberg show that the Asia-bound tanker, Maran Gas Apollonia, was in the Pacific Ocean on Wednesday.

While Cheniere didn’t immediately respond to a request seeking comment, Shell spokeswoman Natalie Mazey declined to comment.

According to the U.S. Energy Information Administration, as the recent expansion cuts shipping times and costs, by 2021, as many as 550 LNG tankers a year would pass through the Panama Canal from the U.S. Gulf Coast due to demand in Asia.

According to Michael, the arbitrage between gas prices in the Pacific Basin and the Atlantic Basin will need to widen for U.S. exports to Asia to really take off in the near-term.

“A couple of years ago, there was a $5 spread. Today, it is about 50 cents,” he said.

More than half have gone to South America, including Brazil, Argentina and Chile, of the tankers that have left Cheniere’s Sabine Pass terminal. India was the port of landing for the only cargo to have landed in Asia.Dubai, Kuwait and Spain have also received shipments.

According to Poten & Partners, gas to Japan’s Kansai Electric Power Co. and Chubu Electric Power Co. are to be supplied from Cheniere’s first liquefaction plant baed o the company’s marketing unit contracts for these supplies.

(Adapted from Bloomberg)

 

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