Letters to the Editor
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 However, since early 2010 this reference is no longer valid for LNG.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.
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
Petroleumworld News 10/11/2011
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