The US has already overhauled Australia’s LNG super boom to become the largest exporter of gas in the world and it has another 1.5mt per month coming on stream this year:
But the real action now is the second round of LNG super boom in the US. I have pointed out for ages that there is an astonishing pipeline of US LNG projects with export approval and even more coming up from behind:
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By my conversion, this is nearly 250mt of LNG per annum. 2.5x Australian exports. It’s not all going to get up but the Ukraine has begun to seal the deals. Bloomie conversions are smaller than my own but still enormous:
About 30% of planned U.S. LNG export capacity has been booked since war disrupted European energy supplies, a dramatic reversal of fortune for as many as 10 new projects stymied by a lack of financing.
Those new deals are already more than the Russian export volumes to Europe and it’s hard to see them stopping in the short term. Futures prices are well off the highs but still immensely profitable for US exports:
As the US builds out to become by far the largest LNG exporter in the world there are a bunch of implications:
Europe will be tied strategically much closer to the US.
Likewise, Russia will push its gas east and align further with China.
The global marginal cost of LNG will lift more decisively to Henry Hub, lifting prices permanently into the $10mmBtu range as the cost curve floor, except in times of deep economic stress.
If Australia’s east coast does not install domestic reservation for gas and a new taxation regime for LNG exporters, its gas cartel rort is going to get considerably bigger and the negative impacts on the industrial base intensify.
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.
