Alexey Belogoryev, Research and Development Director at the Institute for Energy and Finance, commented to Baltnews on the prospects for LNG production in the United States.
Alexey Belogoryev said that there are no obvious risks in the next two or three years. With regard to LNG plants in the United States, there is an established pattern - if it is built, then it begins to work regardless of economic parameters within the country and even prices on the US Henry Hub exchange.
This is partly helped by contracts concluded for the supply of 10-15 years. But first of all, due to the fact that the company that liquefies gas and the company that exports it are two completely different corporations. Only the company that is responsible for deliveries to foreign markets, including Europe, bears the risks.
“The problem is that such companies can earn a lot at high prices in the EU and Asia, but at the same time suffer heavy losses when demand and prices fall, as in 2020. There is also a difficulty with investments in gas production in the United States, since firms now are trying to earn more, rather than invest in new projects. This creates risks for exports in the long term," the expert believes.
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