Why $70 Is the Most Worrying Number for LNG: David Fickling

Here’s some back-of-the-napkin math to show why LNG producers should be fearful for their future, even if the crisis in the Strait of Hormuz hadn’t just knocked a fifth of global supplies offline.

Take the market price of LNG in megawatt-hours (currently about $50 in Asia), double it, then add $4 or so for operating expenditures. That’s a decent proxy for the costs of electricity from an existing gas generator. If your answer is above $70, then in most of the world, gas is about to get squeezed out by renewable alternatives.

The shock will hit hardest in Asia. It’s the region Shell Plc expects to be central ...