• Ian Barker

Henry Hub prices present material arbitrage opportunity in Europe

Bloomberg reporting this morning that 30 Tankers of LNG are en route from the US to Europe.

The tankers contain a total of 4.9 million cubic meters of LNG, which if I've got my maths right is ~1bn therms / ~32TWh - valuing the cargo at more than £4bn.

The cost of processing and shipping the Henry Hub gas is likely ~55p-60p per therm, which at current prices would mean a profit of £3.3bn to £3.8bn for the cargo.

To put this in context - at current usage rates, this represents about 4 days inventory for this time of year in Europe.

Here's a slide showing the arbitrage value from a client presentation last week.

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