Commodity is king when it comes to liquefied natural gas (LNG). In today’s market the companies that control LNG supply are calling the shots. And more often not, national oil companies are “getting smarter” and not giving up control of their natural gas/LNG supplies.

That’s according to Jim Diemer, managing director of Pace Global Energy Services LLC, who spoke earlier this week at the Platts 6th Annual Liquefied Natural Gas conference in Houston. Diemer said that while commodity owners are increasingly in the driver’s seat where global LNG flows are concerned, those with marketing and trading expertise have the opportunity to partner with the national oil companies.

Regasification terminals, once thought to be a constraint point on LNG supplies, are really just the option cost of playing the LNG game, Diemer said. Regas terminals are the least expensive element of the very expensive LNG value chain. Holding regas capacity in the U.S. Gulf Coast, for instance, merely gives the holder the option of sending LNG cargoes that way.

Henry Hub natural gas prices are becoming more prevalent in world LNG contracts, Diemer said. And more contracts are being indexed to Henry Hub prices. And while U.S. gas supply patterns are changing, LNG is still competitive with domestic supply, Diemer said. Unlike domestic production, LNG is not stranded on one continent but can go anywhere, and it will.

“The LNG is here to stay, and it will continue to grow,” Diemer said. “And if there’s a lot of it, it will just push back on the domestic production.”

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