Europe remains top destination for U.S. LNG for third consecutive month

3/2/2022

Europe last month held its spot as the top importer of U.S. LNG for a third month in a row, taking nearly three-fourths of exports, according to preliminary Refinitiv vessel tracking data.

Europe has become the top receiver of U.S. LNG amid natural gas production declines, limited pipeline supplies and soaring demand for fuel. Sanctions against Russia over its invasion of Ukraine will lead to further calls for U.S. LNG, analysts said.

"We should expect an expansion of the diversion to Europe," said Ramanan Krishnamoorti, a professor and chief energy officer at the University of Houston, following Britain and Canada's closing of their ports to Russian vessels this week.

ASIA EXPORTS

Around 15% of U.S. LNG volumes shipped last month went to Asia, up from about 13% last month, according to data. Rounding out the total, Latin America accounted for about 3% of the month's volume. About 8 vessels responsible for 9% of volumes had not signaled a destination.

Any new shipping constraints will boost LNG gas prices and keep demand high. The European LNG benchmark this week traded at $37.36/MMBtu, according to Refinitiv, compared to $27.59 per mmBtu for the same week in January.

Asia spot gas this week traded at $37.50/MMBtu , according to Refinitiv, up from $29.12/MMBtu for the same period in January.

"Further upside awaits if other European countries follow suit," and bar Russian ships from landing, said Kaushal Ramesh, an analyst at Norwegian research firm Rystad Energy.

Germany this week said it would build two LNG import terminals and increase its natural gas reserves to cut dependence on Russian gas.

U.S. LNG exports to all destinations were 6.4 MMtpy in February, down from 7.3 MMtpy the prior month, according to Refinitiv.

The U.S. nearly reached export capacity in January with March estimated to reach about 5.2 MMtpy, according to Reid I'Anson, senior commodity analyst at data provider Kpler.

Helping boost U.S. supplies, the first cargo of the super-chilled fuel produced at Venture Global's new Calcasieu Pass export facility departed on Tuesday.

The cargo was loaded on the Greek-flagged tanker Yiannis, chartered by JERA Global Markets Pte Ltd., a subsidiary of JERA Co.

Reporting by Marcy de Luna; editing by Richard Pullin