Cheniere moderates 2020 U.S. LNG growth estimates

4/30/2020

U.S. liquefied natural gas company Cheniere Energy Inc said it moderated its growth estimates for LNG exports in 2020 from prior expectations due to the downturn in energy markets and the outbreak of COVID-19.

Cheniere said in its first-quarter earnings that it recently experienced an increase in the number of LNG cargoes for which customers have notified the company they will not take delivery.

The company, however, said it does not expect the canceled LNG cargoes to have a material impact on its forecasted financial results for 2020, due to the highly contracted nature of its business.

Cheniere said its customers continue to be obligated to pay fixed fees for the canceled cargoes. During the first quarter, the company said it recognized revenue of approximately $53 million associated with canceled LNG cargoes.

While worldwide demand for LNG has increased by about 10% during the first quarter of 2020 versus the same period in 2019, Cheniere said it expects “to potentially see year-over-year declines in some future quarters as reduced economic activity affects LNG demand and high storage inventory levels reduce the need for imports.”

Cheniere also noted that robust LNG supply additions over the past several years, along with warmer winters and strict virus containment measures, have exerted downward pressure on global gas prices. Gas contracts in Europe and Asia have plunged to record lows over the past week or so.

Cheniere said total world LNG demand grew by 13% in 2019 to approximately 360 million tonnes per annum (MTPA). IHS Markit, a consultant, this month projected LNG demand in 2020 would reach 363 MTPA, but that is down from a pre-COVID-19 estimate of about 377 MTPA.

Separately, Cheniere said it still expects to complete the third liquefaction train at its Corpus Christi LNG export plant in Texas in the first half of 2021 and the 6th train at its Sabine Pass LNG export plant in Louisiana in the first half of 2023.

The company also said it expects to start construction of the Stage 3 expansion at Corpus upon entering into an engineering, procurement, and construction contract and additional commercial agreements, and obtaining adequate financing.

Earlier this year, Cheniere said it was targeting a final investment decision later in 2020 to build Corpus Stage 3.

Reporting by Arathy S Nair in Bengaluru and Scott DiSavino in New York Editing by Nick Zieminski