It used to be that liquefied natural gas (LNG) was sold using long-term contracts with a specific buyer, usually having an international destination. However, late last year, that changed when a tanker cargo of U.S. shale gas — chilled LNG – left Louisiana, went through the Panama Canal and unloaded at Mexico’s Manzanillo terminal. Its original destination was Asia. However, spot market traders negotiated a better price and sold it to buyers in Mexico.
This broke the prohibitions in long-term LNG contracts which defined the ultimate destination and some international producers have wanted to eliminate the destination clauses so that cargoes could be rerouted or resold while enroute.
Some industry watchers believe this could indicate that long-term contracts may be passé and LNG trading becoming an emerging spot market, like the oil market. This, they believe, will be fueled by the current supply glut of American shale gas and may mean the demise of long-term contracts as buyers switch to flexible agreements.
#LNG #ShaleGas #Shale #gas #USA #mexico
