Weak oil threatens US export of LNG, leaving Asian buyers stranded
* Falling oil price blunts appetite for U.S. LNG exports
* Asian buyers of U.S. LNG alarmed by shifting dynamic
* Oil prices may delay Australian, Canadian LNG projects
* U.S. LNG could be diverted to Latin America, Europe
By Oleg Vukmanovic
MILAN, Oct 21 (Reuters) - Plunging global oil prices may turn hopes for cheap liquefied natural gas supplies from the United States into a costly disappointment for Asian buyers who have already invested billions of dollars in long-term contracts.
The 26 percent price slide since June to $85 a barrel exposes cracks in the assumption by utilities and industrial companies from Japan to India that cheap U.S. LNG would muscle into high-value Asian energy markets from 2016.
Oil prices form the backbone of LNG trade to Asia, because exporters outside the United States typically tie 25-year supply deals to crude oil prices. If prices continue to fall, these suppliers from Qatar to Australia will regain their edge over upstart U.S. producers.
"From the buyer's view, $80 oil makes oil-linked supplies less expensive ... it makes U.S. LNG relatively less attractive for buyers," said one industry source with a commercial focus on North American projects. Continued...