What it is
LNG is natural gas cooled to around minus 162 degrees, until it turns to liquid and takes up roughly six hundred times less space.
That is what lets gas travel by ship instead of by pipe. It also means the gas passes through a chain of very expensive steps before anyone uses it: liquefaction at one end, a fleet of specialised ships in the middle, and storage and regasification at the other.
Each of those steps is usually owned, financed and contracted separately. The project works only if every one of them keeps working at once.
What he looks at
Where the gas comes from
A liquefaction plant is only as good as the gas behind it. He wants to know whether supply is firm for the life of the contracts, and who carries the risk if the field underdelivers.
Who has agreed to take it
Long-term sale and purchase agreements carry most of the weight in LNG. How volumes can be reduced, where cargoes can be sent, and how the price is linked all decide whether the revenue is as solid as it looks.
How the pieces line up
Shipping, terminal access and the sale contracts have to match in volume, timing and duration. When they do not, the gap usually turns up years later, at the worst moment.
Why it matters
Australia is one of the world’s largest LNG exporters, and much of what it produces goes north to buyers in Asia. The plants are what people see. The contracts are what decide whether a project pays.
