from Saturday's WSJ. Last sentence relevent to WOR and indicitive of how many other oil energy firms are thinking i.e. capex in hydrocarbon sector remains on hold. Meanwhile WOR still have work at Wheatstone which has blow out in time and money which will help revenue for 1H17 but giant Gorgon project almost cmpleted. The 200 B spend in Oz LNG over past 10yrs was a huge boost for engineering sector and WOR did plenty. But not much left and by mid CY17 will be over. WOR will tender for maintenance wk and should win some.
LNG glut looms as US cranks up gas export to Japan
An LNG tanker arrives at Chubu’s thermal plant in Joetsu, Japan, last month.
MAYUMI NEGISHI
The Wall Street Journal
12:00AM February 6, 2017
In early January, a ship carrying liquefied natural gas from Louisiana docked on the Japan Sea coast, where it will fuel a power plant owned by Chubu Electric Power Company.
It was a milestone: LNG — gas supercooled into liquid form at minus 260 degrees Fahrenheit — has been coming to Japan for decades, but this was the first LNG shipment derived from American shale gas.
US natural gas is playing a role in a transformed energy market for Japan, which would quickly grind to a halt without imported fuel. Ample supplies of gas from around the world are bringing down prices for Japanese consumers and factories previously at the mercy of major oil and gas players. Helped by deregulation, electricity prices fell nearly 8 per cent in 2016.
The prospects of an LNG glut could be propelled further by the energy-friendly administration of President Donald Trump, who has said Japan doesn’t buy enough American products.
Buyers in Japan “now have more options and can say no to what’s being negotiated. They can walk away”, said Anne Hung, a partner at law firm Baker & McKenzie who advises Japanese companies on oil and gas deals.
The changing market isn’t good news for everyone, including some potential US suppliers that are getting into the game late.
Companies can get whipsawed by unexpected price swings, such as the one that dropped the spot price of LNG in Japan from nearly $US20 per million British thermal units in 2014 to below $US5 in early 2016 before a recovery later in the year.
The current price is $US8 per million BTU.
After misreading natural gas prices in connection with LNG investments, major trading companies Mitsubishi and Mitsui both recorded multi-billion-dollar losses in the year ended March 2016.
Japan is the world’s biggest buyer of LNG, receiving 85 million tonnes a year on giant tankers.
The imported LNG is the leading fuel for electricity generation after the Fukushima nuclear accident in 2011 pushed most nuclear reactors offline, accounting for 44 per cent of electricity in the year ended March 2016.
Last year Japan spent nearly $US30 billion ($39bn) importing LNG, so if the US over the next decade can grab a significant chunk of that pie, it could make a dent in the $US60bn trade surplus Japan had with the US in 2016.
That will mean competing with Australia, which was the biggest LNG supplier to Japan last year.
Mr Trump’s nominee for energy secretary, former Texas governor Rick Perry, said at his Senate confirmation hearing in January that he wanted to boost US exports of LNG.
“If we produce it in America, it makes abundant good sense to me for us to sell it to the world,” he said.
The issue for now is oversupply. Last July, Royal Dutch Shell postponed a final investment decision on an LNG export plant in Louisiana, with Shell saying it was “not the moment to commit to large-scale capital outlays”.
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