The Valor Blog.
Investment News and Views, Direct from Our Team.

Something that has worried us for a while…

In this video here, Jim Chanos talks about the risks to Australia’s LNG boom. He raises questions about the viability of the “$200 billion worth of LNG plants plants on the drawing board”. He believes that the price arbitrage between Asian LNG prices and the growing supply of cheap gas is likely to eventuate.

“LNG prices in Asia are $15 MCF versus roughly $3.5 MCF at the Henry Hub.”

“I would be really concerned if I was Australia”.

We have been avoiding this sector for a while for these exact reasons. How it pans out for the high cost LNG operators in Australia is unknown, but I wouldn’t want to bet my wealth on prices staying at $15 to $17 when there is a significant stream of gas coming into supply at fractions of that price over the coming years.