Europe has often been touted as a natural home for American LNG given the EU’s concerns about energy security and its dependence on pipeline flows from Russia. However, the fall in oil and gas prices has made US LNG unattractive to European buyers. Significantly, the first cargo from Cheniere Energy’s Sabine Pass plant was sold to Brazil, and future shipments look set to head to Turkey, South America, the Middle East and Asia.
When global oil and gas prices were high, Henry Hub-based pricing had a clear competitive edge over oil-indexed LNG in Europe and Asia – hence the push from large consumers such as Japan and South Korea to diversify their purchasing strategies away from oil indexation towards gas-on-gas pricing.
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