LNG may turn more expensive than crude oil, Bernstein says

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LNG may turn more expensive than crude oil, Bernstein says

Publish Date: Friday,20 June, 2008, at 12:59 PM Doha Time

LONDON: Liquefied natural gas may become more expensive than crude oil as demand from Asia and Europe rises faster than supply, Sanford C Bernstein & Co said.

“It’s clear that LNG prices overall are set to rise towards parity with the oil price,” Bernstein analysts led by Neil McMahon said in a report yesterday. Sellers of the fuel are renegotiating contracts to increase prices, it said.

Prices may decline in 2009 and early 2010. After this, limited new supplies of LNG between 2010 and 2015 will make market conditions “very tight,” raising the potential of “an LNG premium above the oil price,” the report added.

LNG cargoes have sold for as much as $20 amn cubic feet this year, Sanford said. Crude oil futures at today’s price of $136 a barrel are the equivalent of about $22 amn cubic feet, based on the energy content of the fuels.

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