August 3, 2012 / 2:29 PM / 7 years ago

US LNG exports have no price advantage in Europe -Deutsche Bank

* US LNG exports to be at same price as UK’s NBP hub

* But U.S. LNG could divert supplies from Asia

LONDON, Aug 3 (Reuters) - Potential future U.S. exports of liquefied natural gas (LNG) would have no price advantage over European hub prices and therefore cannot directly displace gas into Europe, Deutsche Bank said on Friday.

The first U.S. LNG exports are expected to come from the Sabine Pass terminal from 2016, and its export price will involve a 15 percent premium to the U.S. Henry Hub natural gas trading hub, along with a fixed capacity charge of $2.25-3.00 per million British thermal units (mmbtu).

With the addition of transport and liquefaction charges, U.S. LNG exports would not have a price advantage at Britain’s National Balancing Point (NBP), Europe’s benchmark gas trading hub, Deutsche Bank said.

“Comparing U.S. LNG exported to Europe with UK NBP gas prices shows that the price advantage would be virtually nil over the 2016-2020 period,” Deutsche Bank said in a research note.

“So U.S. LNG exports cannot directly displace gas into Europe but could free up flexible LNG supplies, which otherwise would have been imported into Asia.”

Deutsche Bank estimated U.S. LNG exports would cost $9 to $10 per mmbtu between 2016 and 2018, similar to its estimates for NBP hub spot gas prices.

But the bank warned that LNG supplies might become more inflexible after Qatar, the world’s dominant LNG exporter, successfully renegotiated new long-term deals during the past year.

“Given the success with which Qatar has contracted for firm demand on an oil-indexed basis in the last year, there may be less flexible volume available to the market in 2017-2020 than there was over the 2010-2011 period, depending on the volume of U.S. LNG export ultimately approved by government agencies,” the bank said.

Four LNG export terminals in the United States have so far secured customer interest, and their total capacity would be around 48 million tonnes per year, but analysts have said they expect the United States to cap its LNG exports to ensure low gas prices for its domestic industry. (Reporting by Henning Gloystein, editing by Jane Baird)

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