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Absurd and senseless decision from PDVSA,
freezing LNG export projects

 

----- Original Message -----

From: Evanan Romero

To: Petroleumworld Editor

Sent: Wednesday, October 05, 2011 3:06 PM

Subject: Re: LNG plant ( PDVSA to freeze LNG export projects)

This decision is one of the most absurd and senseless taken by the regime, among many foolish and wrong to have taken place over the last years.  I do believe that today LNG prices  reward investment in  LNG even with the offshore gas and offshore development costs .

I've been the last two  years involved  in the business of LNG and I'm as project manager to build a LNG regasification terminal in Bahia Las Minas , Panama. I have to  monitor the market daily.  It seems that  PDVSA is using a mistaken reference for the  LNG prices. I believe they are looking only to Henry Hub prices. However, since  early 2010  this reference  is no longer valid for LNG.  Henry  Hub in Texas does not longer sets the price of this commodity because the U.S. stopped being  a premium i mporter of LNG because of the emergence  of  domestic gas  production  [ shale gas ]. LNG producers  do not even  look at the NBP [Northern Balance Point] in UK , but mainly the LNG market  of Asia or the  JKM [ Japan -Korea Mkt ]. TT gas is being exported  there even with  LNG tankers freight of $ 110 thousand per day and and up to 50 days at sea and in that market they sell LNG for $ 16 to $ 17 on MMBTU.  TT Atlantic LNG's FOB  prices  has been lately  at $ 13.50 per MM BTU [ie , today this price  would be an energy equivalent oil price of almost $ 80 per bbl ]. I will tell PDVSA that the problem is that there is  "no price ".  The great absence in PDVSA is knowledge since there is no tec hnically or in-depth management. The cost to liquefy natural gas should be in the order of  $ 4 per MMBTU; however if PDVSA is asking that this gas be sent to the local market which is sold at  $ 1.0 to 1.25, obviously that selling at this huge loss does not make sense to build a liquefaction plant .  There is No a single Government that would get finance for a project like this.


Evanan Romero,
President Grupo Asesor Petrolero Venezolano "GAPV LLC"

PO Box 56-1106; Miami, FL.  33256-1106
Office: +1.305.378.6642; mobile: +1-305-926-8136
evanan.romero@gapvenezolanos.com
 skypename:  evananromero

 

 

Petroleumworld News 10/11/2011

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