What determines the price of LNG?

The price of liquefied natural gas (LNG) usually reflects the energy market into which it is sold. LNG sold into well-established gas markets, such as Europe, is priced to compete with alternative sources of gas, whereas in Asia it is usually linked to the price of crude oil.

What is the reality of the LNG market?

A reality for the LNG market is that – for import projects to make commercial sense – it has to be shown that LNG can compete on price with other energy sources (including pipeline gas). Even in markets where policy decisions encourage natural gas use, such as China, price differentials matter.

How is the price of LNG set?

The price of LNG would be, for example, 115% of the Henry Hub price plus a fixed liquefaction fee, to give a price per MMBtu. Although the shale discoveries in the US have now made it an LNG exporter, US producers have also set their export prices against the Henry Hub.