As consumers, we all want the most “bang for the buck.” We thrive on finding the most competitive prices for our needs and wants. But what if this comes at the expense of fellow Canadian companies? According to a new report by TD bank, Western Canadian plans for initiating a liquified natural gas export industry can be interrupted when taking the recent China-Russa deal in to consideration. Russia recently finalized a US$400 Billion deal to provide China with an estimated 38 billion cubic meters of natural gas at a competitive price of around $10 per million cubic feet. This new price beats the previous mark of around $15 per million cubic feet. Needless to say, this will come as a shock to western Canadian companies looking to launch a liquified natural gas company.
The coming stream will give Asian buyers the advantage of shopping around and bargaining for the lowest price in Liquified Natural Gas Contracts. This, of course, could account in lowering the potential prices Canadian producers would receive. TD has noted that Canada still offers numerous spreads and proximity to the Asian market. Canada also maintains access to the UK and other European nations. This may act as a sufficient potential market for Canadian resources particularly when considering the ongoing need for western European nations to diversify away from Russian gas. According to TD, we can expect two Liquid Natural Gas projects to secure their final investment decisions before the end of the year which is why it is absolutely essential that Canadian proponents move rapidly in order to grab first-mover advantage. The deal has already concerned Japanese lawmakers who have recently lobbied their Prime Minister Shinzo Abe to receive a stale Japan-Russia pipeline.
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