"The LNG industry is suffering from an anxiety attack over falling oil prices and uncertainty around global growth," Hong Kong-based Bernstein analyst Neil Beveridge said in a recent report, according to Bloomberg.
"We expect buyers' appetite for US LNG to be diminished as they reappraise supply options in a lower oil price environment."
He warned that US LNG will only be competitive in the premium Pacific market if "long-term Henry Hub gas prices are below $4 per million British thermal units and Brent crude is sold above $80 a barrel".
"So far in January, natural gas futures have averaged $2.97 in New York while London-traded Brent oil contracts are at $49.89 a barrel," Bloomberg reported.
The analyst was also critical of Australia's LNG scene and expected expansion for the commodity would come from Papua New Guinea and the emergence of new LNG sectors in Canada and Mozambique in coming years.
According to the Australian Financial Review, he said several of the under construction LNG project in Australia would never have been built if they initially faced the recent low oil price environment.
Beveridge said developing a new LNG project was about $800-1000 a tonne a decade ago while new greenfield LNG projects in Australia faced costs of up to $4000/t which was "simply too high".
"The broker's top picks among stocks for investors to play the upside in LNG are ASX-listed Oil Search, a partner in the PNG LNG venture, US-listed InterOil and Japan's Inpex Corporation, which leads the $US34 billion Ichthys project in Darwin and is partnering Shell in the Prelude and Abadi floating LNG projects north-west of Australia," the newspaper reported.
