By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
AmextaFinanceAmextaFinance
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
AmextaFinanceAmextaFinance
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
AmextaFinance > Markets > Commodities > US LNG projects win higher processing fees as interest rates climb
Commodities

US LNG projects win higher processing fees as interest rates climb

News Room
Last updated: 2023/08/30 at 10:29 AM
By News Room
Share
4 Min Read
SHARE

By Curtis Williams

HOUSTON (Reuters) – Long-term buyers of U.S. liquefied natural gas (LNG) are willingly agreeing to higher liquefaction fees at newer export projects, according to analysts and developers familiar with the matter.

The U.S. emerged in 2022 as the world’s second largest LNG exporter on plentiful supplies of natural gas and relatively low processing costs per metric ton of LNG. But rising interest rates and higher construction costs have pushed up liquefaction fees, also known as tolling fees.

“We would naturally expect increased costs of project development, due to higher interest rates or other factors, to have a corresponding impact on liquefaction fees,” said Lyle Hanna, a vice president at Commonwealth LNG, one of several U.S. LNG export projects working toward financial approvals.

Since Russia’s invasion of Ukraine last year, the Dutch Title Transfer Facility (TTF) price has been much higher and is unlikely to return to the pre-invasion price levels, said Jason Bennett, a partner at law firm Baker Botts who negotiates LNG contracts.

Bennett said the willingness by long-term customers to pay higher tolling fees and ultimately higher prices for U.S. LNG was because newer projects are still providing very good margins due to the low gas prices at the Henry Hub, the main trading point for U.S. .

“U.S. LNG remains the best source of low cost LNG in the world…If the price used to be $2.25 (per million British thermal units) and it’s $2.75 now, ok, but it’s still the cheapest price of LNG anyway,” said Bennett.

The most recently approved project – NextDecade (NASDAQ:)’s Rio Grande LNG – increased its liquefaction fee as project costs rose, said Jason Feer, global head of business intelligence at LNG shipping and brokering firm Poten & Partners.

“NextDecade went back to their offtakers and sought an adjustment of their contract levels and our understanding is most of them agreed,” Feer told Reuters.

NextDecade did not reply to questions about its processing fees. However, in a July 20 filing with the Department of Fossil Energy and Carbon Management, NextDecade revealed amendments to its contracts with all its long-term customers except France’s TotalEnergies (EPA:) and Japanese trading house Itochu.

“The offtakers agreed because the project was very far advanced and was ready to go to FID (financial investment decision) and I think some of those contracts were very low-priced by current standards,” Feer said.

The largest U.S. LNG exporter Cheniere Energy (NYSE:) has cut its project financing costs by funding its newest Stage 3 expansion project from its balance sheet.

“Increasing our own equity in our projects and thereby reducing the level of debt required us to fund our expansions and is a competitive advantage,” the company said.

Other developers are turning to increased equity investment in new projects to reduce the impact of higher interest rates on finance costs, said Poten’s Feer.

Read the full article here

News Room August 30, 2023 August 30, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Trump Mobile quietly drops ‘Made in America’ smartphone promise

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Nike posts worst results in years but says outlook is improving

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

US Treasury asks Congress to scrap retaliatory tax measure in Trump budget bill

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Tesla parts ways with top executive and fixer for Elon Musk

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Chipotle earnings: CEO Scott Boatwright explains the company’s Q1 results

Watch full video on YouTube

- Advertisement -
Ad imageAd image

You Might Also Like

Commodities

Russia mulls extra tax for some commodities exports, including metals – sources

By News Room
Commodities

Gold prices tumble as Fed talks higher rates

By News Room
Commodities

Crude oil prices endure downturn amid U.S. interest rate hike anticipation

By News Room
Commodities

China approves export licences for chip materials gallium, germanium

By News Room
Commodities

European energy crisis: ECB, IEA and EIB to strategize on systematic transition amid soaring prices

By News Room
Commodities

Federal Reserve interest rate signals prompt oil price dip

By News Room
Commodities

Oil prices inch closer to $100 per barrel amid inflation concerns

By News Room
Commodities

Brent Crude Prices May Hit $120 per Barrel, Warns JPMorgan

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

YOUR EMAIL HAS BEEN CONFIRMED.
THANK YOU!

Welcome Back!

Sign in to your account

Lost your password?