China and Russia are expected to sign a new mega-gas deal in the future but it failed to eventuate last night. From the AFR:
President Xi Jinping of China and the Russian leader, Vladimir Putin, were unable to announce an agreement on a natural gas deal, despite high expectations that mutual political interests would help finally push through the project.
…According to Xinhua, the Chinese state news agency, after meeting Xi in Shanghai, Putin said, “I’m glad to be informed that the two sides have made significant progress in the price negotiation of the east route of the natural gas project.”
A joint statement said Russian natural gas supplies would start flowing “as soon as possible”, a phrase used after many previous negotiations between Gazprom and the China National Petroleum Corp, and an indication that the two sides could not close the gap on price in time for the two leaders to announce the deal at their meeting.
From a few days ago:
A tentative agreement signed in March last year was for Russia’s government-controlled Gazprom to deliver the state-owned China National Petroleum Corp, 38 billion cubic meters of gas from 2018. There is an option to increase this to 60 billion cubic meters a year once the pipeline is completed.
According to Mr Powell, the deal is likely to be struck at around $US10 per million British thermal units, or million BTUs , far cheaper than the $US15/per million BTUs being paid for Australian liquefied natural gas.
“We are still exchanging views with Moscow and we will try our best to ensure that this contract can be signed and witnessed by the two presidents during President Putin’s visit to China,” deputy Chinese foreign minister Cheng Guoping said on Thursday.
$10mmbtu versus Australia’s $14mmbtu break even. The project is still expected to go ahead.
Meanwhile, in the US, Cheniere is talking up exports:
Cheniere, which is building liquefaction facilities at its Sabine Pass LNG terminal in Lousiana, expects that US LNG exports capacity could reach 125 MT of LNG by 2020, said Jean Abiteboul, President, Cheniere supply and marketing at the Global LNG Summit, a part of the Flame conference being held in Amsterdam.
He also said that impacts of US LNG exports have already started, which can be shown in changes in LNG pricing.
That’s a lot more than current approvals around 80 million tonnes. I’ll believe it when I see it. Nonetheless, LNG in 2018 is shaping up to follow iron ore today.
