The LNG netback price, which is an export parity price that represents a domestic supplier’s opportunity cost of supplying to the domestic market when the alternative is exporting the gas as LNG, is calculated by taking the price that could be received for a quantity of the fuel and subtracting, or netting back, the costs incurred by the supplier to convert the gas to LNG and ship it to the point of delivery.

Determined by the net revenues from downstream sales, less all the costs associated with bringing the commodity to the market, excluding production and liquefaction costs.

The largest typical costs included in the calculation of LNG netback is the cost for transportation which can represent a significant proportion of the final LNG cost.