NEW YORK—The 100th shipment of LNG from Cheniere Energy Inc.’s (NYSE MKT: LNG) Sabine Pass, La., terminal earlier this month signaled how North American natural gas has already established itself as a swing provider in global consuming markets, Haynes and Boone LLP and global shipping analysts Poten & Partners said during a joint press conference April 20.

Notably for U.S. and Canadian producers and midstream operators, the volumes welcomed as reliable supply worldwide have meant that prices at the wellhead and upon delivery to the liquefaction terminal are now an accepted variable in the final delivered price for LNG at the regasification market. That means that, within wide boundaries, gas producers, pipelines, and processors do not have to worry greatly that nominal increases in their prices would hamper the development of the LNG export business.

Granted, these are early days and 100 cargoes from one terminal are hardly a statistically robust sample out of a global market. However, macroeconomic models predicted that North American LNG would be welcomed into the global market and the early results are proving out most of the expectations of a much more liquid global commodity market.

Majed Limam, senior LNG and natural gas consultant with Poten, said “the price at which you lift feed gas is not a [true] price [in the global LNG market]. It is a cost. As the market develops and grows, the as-delivered price is the true price.”

Cautioning that the market intelligence is preliminary, Limam noted, “we are seeing a diverse client list for U.S. LNG. A lot is going to Asia through the Panama Canal. Surprisingly there is not much going to Europe [which was expected] but there is some going to South America. Let’s see what happens once all five of the export terminals that have been permitted for the U.S. are onstream. We may start to see more regular trade lanes develop.”

He also stressed that the business case for the different U.S. export projects varies. Sabine Pass is an “FOB” facility, for the shipping term free on board.

“The offtake partners pay on a set formula, usually 1.15x Henry Hub, plus liquefaction costs,” Limam said. “The market works on the Henry Hub basis. Other projects are tolling arrangements.”

Brad Richards, partner with Haynes and Boone, noted that before the entry of U.S. LNG, “we used to see straightforward north-to-south and east-to-west shipments. Now movements are all over the place. That more liquid trading has led to changes in the terms of sale and marketing for the commodity.”

He also noted that the five companies working on export terminals in the U.S. “already had their supply and customer arrangements in hand before they started. These are all big projects designed to support their own project financing. Now that the market is becoming more liquid, there is some question about how financing will be assembled for future projects. The new model is treating the LNG terminal as a refinery where the client buys the commodity at the wellhead and just pays for processing.”

Andreas Silcher, partner with London-based Haynes and Boone CDG, added, “small-scale LNG is the emerging trend. Flexible regasification facilities are proliferating. We just saw the first purpose-built LNG bunkering ship delivered. There are several African gas-to-power plans. All these changes are resulting in a fundamental shift in the nature and scope of many LNG transportation contracts.”

In February 2016, Cheniere became the first company to ship LNG from the contiguous U.S. in more than 50 years and is currently the only exporter of U.S. LNG. In addition to three fully-operational LNG trains at Sabine Pass, Train Four has entered the commissioning process and is expected to reach substantial completion in second-half 2017.

Train Five is under construction and expected to become operational in 2019. Train Six is fully permitted and being commercialized. In addition, Cheniere currently has two trains under construction at its liquefaction project near Corpus Christi, Texas, with operations at both trains expected to begin in 2019. The projects at Sabine Pass and Corpus Christi represent a combined investment of about $30 billion for Cheniere and its subsidiaries.

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