LNG and the Importance of the Henry Hub Benchmark
Let’s clean this up bit by bit: firstly, Cheniere did not invent HH as a price marker for LNG. LNG Sellers did that when the North American gas market went stratospheric – before shale. Then, in the total scheme of things, HH is still insignificant to LNG. the vast majority of contracts is oil linked and will be for a long time. HH as a price determination mechanism is simply a factor because US producers buy gas at HH prices or a derivative of it. Buyers need HH prices like they need a big ugly wart on their nose. In the longer term, TTF is going to a much more important price marker for LNG than HH will ever be. True market prices are determined where stuff is sold, not where stuff is produced.
Unlike solid forms of energy coaxed from the earth — such as crude oil and coal — the odorless vapor known as natural gas is positively invisible. So it follows, bits of technical and market adaptations are needed to ensure the natural gas can be profitably shipped and priced, especially on a global scale.
