Citi has a great note today on relative cost curve positions for Australian versus US LNG:
We think there is a belief by some that production from the three CSM-LNG projects in Gladstone (GLNG, QCLNG, APLNG) is likely to be impacted by weaker LNG markets, with production curtailed to, or even below, contractual rates. We think this perception is incorrectly premised on arguments around 1) an uncompetitive high SRMC in an oversupplied LNG market, 2) holding on to limited gas reserves for later life, and 3) dumping gas in domestic market being more profitable. But we disagree for reasons we discuss in this note; rather, we contend that the market should expect projects to maximise LNG production and not be limited to contractual levels because this incremental production is value and cashflow maximizing even at very low prices.
1) QLD SRMC lower than US SRMC
