Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Natural Gas

Henry Hub pricing gives US gas 'huge' advantage in Japan market: Freeport LNG CEO

LNG | Natural Gas | Natural Gas (North American)

Uncertainty remains for US LNG project developers following initial China trade deal

LNG | Natural Gas | NGL

Platts LNG Alert

Capital Markets | Electricity | Energy | LNG | Natural Gas | Shipping | Leveraged Finance & High Yield | Materials | Building & Construction | Financial Services | Banking | Infrastructure | Structured Finance

Infrastructure Summit

Coal | Emissions | Electric Power | Natural Gas | Oil

Norway-focused Lundin Petroleum to be carbon neutral by 2030

Henry Hub pricing gives US gas 'huge' advantage in Japan market: Freeport LNG CEO


The CEO of Freeport LNG, one of three US Gulf Coast export projects looking to tap into Asian demand, said contracts linked to the Henry Hub price benchmark will revolutionize the Japanese market, even if oil-linked contracts continue to dominate the global LNG market.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"Our customers -- Osaka Gas, Chubu Electric and now Toshiba -- all are focused on getting US-based natural gas here on a Henry Hub-linked basis, because that's the cheapest gas they can get in the world," CEO Michael Smith said on the sidelines of the 2nd LNG Producer-Consumer Conference in Tokyo Tuesday.

"Post-Fukushima, their increasing LNG volumes on top of the very high oil-linked cost is severely hurting their economy. They must drive down the price, and we're happy to be the ones to facilitate that."

Smith said Freeport LNG would be able to deliver supplies to Asia for $7/MMBtu on top of the US price, which he said would still be below the $16/MMBtu that Japan currently pays.

"The preponderance of the market is going to be oil-linked," he added. "That's why those companies that can get Henry Hub-linked supply have a great advantage over being stuck with oil-linked LNG.

"To the extent that enough North American gas comes to market and starts competing and threatening some of the Qatari markets, then maybe they'll still stay oil linked but the percentage of the slope that they use will soften a little. But it will still be oil-linked."

Qatari oil minister Mohammad Bin Saleh al-Sada told the conference earlier Tuesday that US gas benchmarks were unlikely to upset global LNG pricing trends.

Smith described Freeport LNG proposed for Quintana Island, Texas, as the farthest along of any US LNG export applications after Cheniere's Sabine Pass project in Louisiana. He said Freeport LNG would start construction next spring as soon as it gets final approval from the US Federal Energy Regulatory Commission for the first two liquefaction trains.

"We have the financing pretty much in the final stages of being lined up for trains one and two, which is the trains for Osaka Gas, Chubu Electric and BP Energy," he said. "We plan on taking a nine-month break between that closing and the closing for train three with SK Energy and Toshiba, which we hope will be late 2014."

Looking at his competition outside the Gulf Coast, Smith said neither of the two Oregon projects on the US West Coast would get off the ground because of fierce local opposition, and he predicted Canadian projects would continue to face delays.

"The ones in Canada, God knows how long it's going take them to finally get it together," he said. "They used to be years ahead of me, now they're years behind me."

Smith said Freeport LNG would start construction the day after FERC approves its permit.

"FERC is moving very slow on every single LNG terminal, and that's the gating issue holding Freeport back," he said. "We have the customers, we have the money, we have the engineering done, we're ready to go."


--Edited by Geetha Narayanasamy,