How will Gazprom handle the LNG glut?

The US is about to start its first new LNG export facility for over four decades. And it’s pointing its tankers to Europe, Gazprom’s largest and most important gas market.

In Paris last week, Cheniere Energy chief executive Charif Souki said the 25mn t/yr Sabine Pass project could deliver LNG to Europe at $4.50/mn Btu. This is close to the breakeven cost for Gazprom delivering to Europe, according to Societe General European gas and LNG analyst Thierry Bros. He estimates Gazprom would need prices of $4.50-5/mn Btu, including transport and taxes. This means the US slightly edges out Russia on price to supply Europe. Continue reading