I take a key interest in the LNG market mainly due to my high interest in Tenaz Energy and the fact they have the majority of there revenues and profits from TTF gas. But I also find the market interesting as it becomes more global a natural arbitration will build into the price as more supply comes on, but also with that new supply will come more and more demand. For Tenaz, they own the local mine effectively. They will bring the cost per produced molecule down overtime as they eek out spending cuts from the NAM op and bring on more production over a lower fixed cost base. And Tenaz (and all local operators) will have a $4-5mmbtu price advantage over there LNG competition as thats what it costs to freeze, ship, un-freeze the gas. Alot of the new LNG supply is coming from the US which has around a $3 cost for gas domestically, so $7-8mmbtu end point in LNG markets which will mean low cost ops in domestic markets which compete with LNG have a nice profit margin. Obviously as Henry Hub fluctuates up/down, the end point price will also go up/down depending on circumstance.
Obviously in Canada the AECO market is terrible, prices can go as low as 5c and you can hedge out periodically at $3. But Canada isnt a large producer so they arent the marginal cost molecule in the market. You need to go to what is the highest cost molecule entering the market + transportation and liquifying expenses, and that should be the end price point for TTF and JKM markets. Alot of the majors such as Totalenergies are pricing future LNG contracts indexed to Brent. These indexes can vary from 12-15%, the higher the better of course. I find it curious they'd do this. They obviously believe Brent will be a higher and more stable price point than TTF itself, but LNG prices will be incorporating these Brent indexed prices into its own market pricing mechanism (I believe).
Natural gas demand is growing like a rocket. Its the 'real' transition fuel as people displace coal and even oil, they will turn to natural gas. China is already displacing diesel for LNG, and shipping is incorporating ammonia and I think the pattern remains as companies look to reduce CO2 output whilst using a similary high power density fuel source. Add on data center build out, air-conditioning, heating, and frontier and emerging markets increasing GDP per capita, and you have a huge increase in energy demand. And one of its cheapest and easiest fuel sources is natural gas. Especially now its transportable via LNG.