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									             LNG Exports from North America and Development of Gas
               Shales beyond North America will Lead to Gas Price
                                 Convergence
       Reference Code: GDGE0678VPT                                                                                                            Publication Date: January 2012


       1         Table of Contents
       1 Table of Contents.................................................................1
        1.1 List of Tables .................................................................1
        1.2 List of Figures ................................................................1
       2 Summary .............................................................................2
       3 LNG Exports from North America and Development of Gas
         Shales beyond North America will Lead to Gas Price
         Convergence........................................................................2
        3.1 North America is Set to Become an LNG Exporter
             Owing to Shale Gas Boom ............................................2
        3.2 Successful Shale Gas Development Elsewhere will
             Further Increase Natural Gas Supply in the Market ......3
        3.3 The Resultant will be the Convergence of Natural Gas
             Prices in the US, Europe and Asia Pacific in the Long
             Run 4
       4 Appendix ..............................................................................5
        4.1 Methodology ..................................................................5
        4.2 Contact Us.....................................................................6
        4.3 Disclaimer......................................................................6

       1.1       List of Tables
       Table 1: Global, Major Shale Exploration Blocks, 2011 .............4


       1.2       List of Figures
       Figure 1: Gas Shale Resources, Distribution of Risked In-
                 Place Gas, by Region (Tcf), February 2011 .............3
       Figure 2: Asia, Europe and US, Average Estimated Natural
                 Gas Prices, 2011 ......................................................4




                                                                                                                                         GDGE0678VPT / Published JAN 2012 /Page 1
LNG Exports from North America and Development of Gas Shales beyond                                                                                                 Market Analysis Alert
North America will Lead to Gas Price Convergence                                                    © GlobalData. This report is a licensed product and is not to be copied, reproduced,
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       2       Summary                                                       Amidst rising domestic natural gas production in the US, led by
                                                                             shale gas development, the prices of natural gas in the US
       Successful commercial development of shale gas has led the            have remained lower than the prices in Europe and Asia-
       US to be on the verge of becoming a Liquefied Natural Gas             Pacific. As a result, the natural gas producers in the US are
       (LNG) exporter. The rapid increase in domestic natural gas            encouraged to consider exporting domestic natural gas in the
       production in the US has not only reduced its dependence on           form of LNG to markets where the prices are higher.
       LNG imports but also has led to a reduction in natural gas
       prices in the US. The prices at Henry Hub index have been             The developer of Sabine Pass LNG terminal has already signed
       significantly lower than the gas prices in the UK (traded at          LNG supply contracts with GAIL (India) Limited, Gas Natural
       National Balancing Point - NBP) and in Japan (indexed to              Fenosa and BG Group plc. Sabine Pass Liquefaction, LLC
       Japan Crude Cocktail - JCC). In light of the recently signed          (Sabine Liquefaction) is the developer of Sabine Pass LNG
       LNG export contracts by Sabine Pass Liquefaction, LLC                 terminal that will have four liquefaction trains capable of
       (Sabine Liquefaction), developer of Sabine Pass Liquefaction          producing 18 MMtpa of LNG. The project is being developed in
       terminal in the US, LNG exports from the US to countries in           two phases. Sabine Liquefaction aims to sell approximately 14
       Asia and Europe will begin in 2015. The prices for these exports      MMtpa of the capacity under long-term Sales and Purchase
       will be indexed to Henry Hub prices, which are lower than the         Agreements (SPAs). In November 2011, Sabine Liquefaction
       prices in the markets that will receive these supplies. It is         reached its targeted annual contract quantity of 7 MMtpa for the
       expected that shale gas developments in Europe and Asia will          first phase, which will have two liquefaction trains with a
       also start contributing to natural gas production by this time,       combined production capacity of 9 MMtpa, and is advancing
       making more natural gas available in the market. Consequently,        towards making a final investment decision for the development
       it is expected that the natural gas prices in the US, Europe and      and construction of two liquefaction trains. The second phase of
       Asia will start converging around this time, driven by the excess     the project will also include two liquefactio
								
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