Washington (Platts)--4Oct2007

The recent decline in the US dollar compared with other currencies could
make it more difficult for the country to attract spot liquefied natural gas
cargoes, analysts said.

     "There are a couple of different forces at work here," Lee Van Atta, gas
market analyst for R.W. Beck, said. "From an economist standpoint, people have
been pointing at the US dollar issue for a long time. With the rise of China
and India and other global forces, it wasn't looking good for the US dollar."
But the recent rate hike by the Federal Reserve Bank sent the dollar to new
lows against many major currencies, making it more expensive to import
products, such as LNG. 

     While LNG imports were expected to drop once demand and prices began to
pick up in European and Asian countries this fall, analyst John Gerdes of the
Gerdes Group, said LNG imports barely exceeded 1 Bcf/d last week. According to
consultant Pan EurAsian Enterprises, US LNG imports averaged 2.7 Bcf/d in
August and about 1.5 Bcf/d in September.

     "Reports suggest cargoes are being diverted predominately to Asian
nations where netbacks far exceed [US] prices," he said. "Daily pipeline flow
data depicts weak activity at nearly all domestic regasfication terminals,
particularly the 1.8 Bcf/d at Lake Charles, Louisiana facility.

     Jim Jensen, president of Jensen & Associates, said with the weaker
dollar, sellers with the option to take cargoes to Europe will go to the
currency that is worth more. In particular, some of the majors, such as Shell
and BP, have created the ability to swing cargoes to the highest priced
market, he said.

     The weaker dollar could also make it harder for liquefaction plants that
are targeting the US customer to move ahead, Van Atta said. 

     Still, despite the weaker dollar, most analysts agree that the US will
still see LNG cargoes when other markets don't want them.

     Geoffrey Mitchell, president of Brant Energy, said Asian and European
markets don't have nearly the storage capacity that the US has, making them
unable to take cargoes in their off-seasons.

      But the US will remain uncompetitive at other times because LNG is such
a small portion of the overall gas mix, except in New England, he said. On
peak days when more gas is needed, he said, the markets will have to bid up
the price to get LNG cargoes. 

		--Cheryl Buchta, cheryl_buchta@platts.com