The Brent oil price took off 5% Friday night to end at $65.51 in a little short squeeze following renewed falls in the US rig count which was down ten to 875:
This looks like a great move to short. The trend in rigs is unaltered and I expect stabilisation and then a little growth in the months ahead.
For LNG the indicative contract price jumped to $9.57mmBtu:
Spot markets remain stable last week at $7.60mmBtu but that’s not going to last either as Australia’s supply deluge takes off both east and west, and Cheniere Energy begins shipments from Sabine Pass later this year. That cash will be most welcome at the American gas giant as it launches its second major project at Corpus Christie:
The Corpus Christi project is designed for up to three trains with production capacity of approx. 13.5 million tonnes per annum, three LNG storage tanks with capacity of about 10.1 Bcfe, two LNG carrier docks and a 22-mile, 48″ natural gas supply pipeline.
The first train is expected to start operations as early as 2018, with the second train expected to commence operations approximately six to nine months thereafter.
Total project costs of about $11.5 billion for the first two trains, two LNG storage tanks, one dock and the natural gas supply pipeline, will be funded with $3.1 billion of project equity and $8.4 billion of debt.
$16 billion for three trains producing 80% of the output of the $54 Gorgon project or a quarter of the cost for six trains on Curtis Island. I know that the western gas will have a cheaper cash cost once flowing but, jeez, good luck getting more investment here!
