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just won't die.

LNG is just as capital intensive as pipelines, and creates supply chaines that are as rigid, for the same reasons - all the investment is upfront and can only be repaid onver long periods, thus requiring very long, very constraining contracts.

A LNG production facility needs a dedicated LNG regaz facility on the other side, and dedicated LNG tankers (committed to the route between the two) for 20-25 years, and the contracts that formalize that.

It is true that you can reroute a LNG tanker to another destination if you make a profit doing so (shared usually between the seller and the committed buyer), but that's not quite enough to create a liquid market: first of all, the trade unit size is a cargo, ie 100-200 million cubic meters (at current prices: $50-60 million), and the players can only be parties to existing contracts, and holders of capacity in existing terminals.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Aug 15th, 2008 at 07:12:19 AM EST
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