• The role of gas demand in destination markets. Not all end-users are created equal. Even within a single country, many pricing points can occur, and understanding where these prices reside allows for a better comprehension of LNG marketing and trading options. Buyers seeking alternatives to oil or coal have a different pricing point than buyers faced with industrial or R/C growth.
  
• The ability of North America LNG exports to compete with other gas suppliers. Many buyers around the world have multiple supply options, which include not only LNG but also pipeline gas. While distance to market is an issue, it is not the only issue.
  
• Gas pricing issues that will drive future trade, including spot prices, price equivalency, relative gas pricing, and netbacks. Although buyer-seller relationships still influence directions of LNG spot trades, all parties are quickly embracing the market’s rising transparency and liquidity; therefore, pricing will become the dominant force behind cargo movements. At the moment, many buyers vastly overpay for spot supplies from current sources. Avoiding this mistake in the future will involve understanding relative gas pricing around the world.

A key deliverable of the multi-client study (go to the list of deliverables) is a detailed written report. Its outline is as follows:

1. Overview of North American LNG Supplies in the Global Supply Context
   1. Implications of North America’s current market dynamic. Unlike other exporters, North American export projects may not have dedicated feedgas, pipelines, or perhaps even LNG storage. How significant are these obstacles? How much will they affect project development?
      1. Possible project structures.
      2. Types of participants.
   2. Proposed LNG export projects and potential future additions.
   3. North American LNG’s ideal customer profile versus preferences of buyers.
      
      
2. Assessing Potential Markets* for North American LNG Exports
   1. Markets and incremental demand to 2025.
      • Existing major LNG markets by major consuming sector (e.g. residential/commercial, electricity generation, and industrial).
        • Asia, Europe, the Americas, and the Middle East.
      • Future LNG markets and incentives to switch to LNG, by sector.
        • New gas markets in Asia, the Caribbean, Latin America, and Africa.
   2. Buyer preferences
      1. Seasonality.
      2. Timing.
      3. Security of supply, including acceptable levels of political risks and project reliability.
      4. Project participation, including ownership in export facilities and upstream gas resources.
         
         (*Geographical areas covered include Asia (e.g. China, India, Japan, South Korea, the Philippines, Singapore, Taiwan, Thailand, etc.), Europe (e.g. Belgium, France, Germany, Italy, the Netherlands, Poland, Spain, Turkey, the U.K., etc.), selected islands of the Caribbean (e.g. the Dominican Republic, Jamaica, and Puerto Rico), Central and South America (e.g. Argentina, Brazil, Chile, Colombia, Honduras, Panama, and Uruguay, etc.), the Middle East and Africa.)
         
         
3. Oil Substitution
   1. Economics and incentives.
   2. Oil-linked LNG markets
      1. Existing markets.
      2. New, emerging, and the potential of untapped markets.
   3. History of and prognosis for future oil and LNG price linkage and de-linkage.
      
      
4. LNG and North American Gas Pricing
   • Henry Hub and AECO price outlook to 2025, and risks to PIRA’s Reference Case.
   • Conditions that lead to, and prerequisites to earn, LNG price premium.
   • Interplay between spot and long-term markets and the positives and negatives to North American LNG.
   • Spot and long-term LNG pricing. Bearable price and breakeven spot price trends and forecasts to 2025, for:
     • Asia
     • Europe
     • The Caribbean
     • The Middle East
   • Transportation costs and netbacks to North America, by export regions.
     • From Asia
     • From the Middle East
     • From Europe
     • From Africa
     • From the Caribbean
     • From the Americas

• Online Database (May 2011 release). Historical data back to 2005 and forecasts through 2025 in Excel spreadsheets for:
  1. Country-level demand by sector breakdown
  2. Gas pricing and transport cost figures
  3. Existing and future export, transport, and import infrastructure components
  4. Gas price forecast by region for North/South America, Europe, Mideast, and Asia

• Written Report (May 2011). A detailed written report that spells out the findings of the study, the bases underlying the Reference Case results, and a discussion of key uncertainties that impact the major findings and possible alternative scenarios.

• Workshop (June 2011). A live presentation, conducted online, will present the key results of the study, discuss the market implications of these findings, and offer the ability to question the study’s authors.
  
  Workshop Option. For an additional fee, study buyers may choose to have a private (online or on-site) briefing of the study’s findings. Such an option allows for a more thorough dialog with the study authors as well as some customization of the presentation. Arrangements (location, date, etc.) are made on a case-by-case basis, which will determine the cost of the option. Contact your PIRA sales representative if you are interested.
  

• North American Gas Producers know an opportunity when they see it, and LNG exports offer an outlet that provides much more marketing flexibility. With some North American terminals offering open access to liquefaction, gas producers must now look beyond regional U.S., Canadian, and Mexican gas pipeline markets, with an eye on end-users from the Caribbean to Asia.
  
  
• Gas/LNG Marketers need to understand the interplay between potential North American LNG exports and other forms of gas-on-gas competition. Today's market for re-exported cargos alone shows that U.S. and Mexican cargos are ending up in South America, Asia, and Europe. Marketers will want to understand, for example, the bearable price for industry in Texas versus potential buyers in Chile, Jamaica, and China.
  
  
• Trading Companies see North American LNG exports as a starting point for entering the lucrative world of spot LNG trade, as price differentials around the world are as wide as $15 per MMBtu. Traders are beginning to secure large sums of LNG and capture the price discrepancies among the world's regional markets, but the club is still largely a closed one. North American LNG exports, particularly from the U.S. Gulf Coast, would blow the doors wide open in terms of securing supply.
  
  
• Shipping Companies know that an open-source LNG terminal in North America will create an explosion in demand for spot charters looking to secure FOB volumes. North American LNG will bring an eruption in LNG trade that will be heavily influenced by seasonal demand and access to U.S. and European storage.
  
  
• Electric Utilities and Other End-Users constantly consider how changing gas price dynamics will influence service choices and future capacity decisions. Suddenly, what happens to demand in Spain now matters in Houston, and what happens in Tokyo can affect gas prices in the U.K. Long-haul Qatari LNG is backing out short-haul Norwegian volumes in the U.K. The study will make end-users better equipped to adapt to new offers from North American suppliers, as they make more informed choices regarding gas origination.
  
  
• Financial Institutions will benefit from a world of new hedging opportunities that will come from a growing and liquid LNG market, in which Henry Hub and NBP will play a direct role as either a benchmark or a pricing point. The scope of new LNG export projects from North America is vast and financiers will need to understand the value of potential LNG exports to both the owners of the infrastructure and others that use it on an ad hoc or tolling basis.