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Caribbean
T&T to benefit as US LNG prices set to rise
By Sampson Nanton, Trinidad Guardian         May 13, 2008    05:04:00 AM
T&T is set to earn massive returns on sales of liquified natural gas (LNG) to the US in the latter half of this year as analysts say US LNG prices, which have already increased by 25 per cent since March, will continue to rise.
 
The increase comes following a drop in supply as other LNG producing countries divert their exports to more lucrative and easier-to-reach European markets.
 
Energy experts said this country's close proximity to the US made T&T the biggest beneficiary of the pending increase in demand and prices.
 
T&T is already the biggest exporter of LNG to the US and the prospects are looking better.
 
Already reeling from the high costs of oil and laws to ban the burning of fuel in response to climate change, the US is becoming more dependent on natural gas as an alternative form of fuel.
 
Last year 60 per cent of US imports came from T&T. But even as it presented a secure market, the US market was not viewed the world over as a lucrative one offering LNG prices of US$10 per million British Thermal Units (BTUs).
 
But LNG tankers pulling into port in Japan are fetching prices as high as US$20 BTUs....double the US prices.
 
US industry experts said the US had no choice but to increase prices in the summer....with signs already clear that suppliers in Africa, Europe and the Far East no longer find the US market attractive because of the price and distance to trasnport the product.
 
Already the US price has increased to US$12 per BTU.
 
US LNG imports hit a record 770 billion cubic feet (bcf) last year, or about 2.1 bcf per day, but strong competition from Asia and Europe in the winter saw volumes drop off sharply late last year and earlier this year.
 
So far this year, US LNG imports have averaged less than 1 bcf per day, down sharply from a 2.36 bcf per day average for the same four months in 2007.
 
Houston-based consulting firm Waterborne Energy says this is where T&T is set to benefit....as the US turns to T&T to meet the shortfall in supply.
 
It noted that nuclear problems in Japan following an earthquake that damaged a nuclear plant there last year....have also forced that country to look to US LNG as an alternative and that higher demands there this year....would also result in a shortfall in supplies to the US.
 
It says T&T...will once again be the main supplier for the increased demand and at higher prices.
 
However the Wall Street Journal has reported that not everyone agrees that US natural gas prices are certain to rise, as domestic producers have made significant strides in tapping new sources of natural gas, sending US gas production up 7 per cent in January from a year earlier, to 68 billion cubic feet per day.
 
The report went on, “nevertheless, more financial players are saying low prices will not last, pointing out that even as US production increased in 2007, prices still rose 19 per cent.
 
US energy secretary Samuel Bodman arrived in this country yesterday for two days of discussions which will focus on ensuring a steady supply of diverse energy sources....infrastructure and security.
 
He will also chair an energy infrastructure assessment roundtable meeting with Government and industry representatives...as this country continues to establish itself as an energy supplier to the worlds largest economy.
 
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LatinPetroleum.com, www.latinpetroleum.com, Trinidad and Tobago news, 13.May.2008, Source: Sampson Nanton, Trinidad Guardian