The astonishing LNG white elephant

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The SMH blog lifts some Alliance Bernstein research that makes an interesting point about Australia’s LNG boom:

Some Australian liquefied natural gas projects would never have received the go-ahead in the current low oil price environment and stand to be uncompetitive unless prices recover, according to Bernstein Research.

The plummeting oil price has dragged down the prices for LNG, with prices dropping to $US9 per thousand standard cubic feet (mscf), Bernstein said. Given the lag of several months between LNG prices and oil prices, LNG prices could fall further and test $US8 per mscf, creating a “problem” for the industry given the high fixed costs and prices required to generate a return on investment, the Wall Street broker said in a report.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.