Gas Processing & LNG is Produced by Gulf Publishing Holdings LLC



Record U.S. LNG output jump lifts exports in weak market

A sharp increase in U.S. LNG output in the past year has protected the country’s status as the world’s third largest exporter of LNG, despite multiple cargo cancellations this summer.

Over 21 million tons per year of U.S. LNG capacity was added in 2019 and more than 16 million tons in 2020, contributing heavily to a global gas glut.

As the coronavirus pandemic pressured demand and prices, flexibility built into U.S. LNG contracts allowed buyers to cancel multiple cargoes.

However, although exports have been dropping throughout 2020 and individual projects have been impacted by rejections, U.S. exports and deliveries to Asia and Europe remain much higher than a year ago.

Graphic: Top LNG exporters in 2020 - here

Analysts said massive production capacity supported U.S. LNG, with strong exports achievable when the price differential between the U.S. and other markets is wide enough.

“What we saw in the first half of the year...was primarily the result of newly expanded terminal capacity and low prices, wherein a spread still existed to Europe and Asia from the Gulf (of Mexico),” said Jack Weixel, Senior Director for gas, power and energy futures at IHS Markit.

The U.S. exported 26.5 million tons of LNG in January to July this year, a 41% jump on the year earlier period, Refinitiv Eikon data showed.

Xi Nan, vice president, gas and power markets at Rystad Energy, said he expects the U.S. to produce 55 million tons of LNG in 2020, a 53% increase from 2019.  

IMPORTS RISE

The summer dip has impacted U.S. deliveries to Latin America, but exports to Asia in June and July were 67% above last year’s level and supply to Europe fell by just one cargo.

Overall, total European LNG imports were lower in June and July, while Asian deliveries were stable, suggesting the U.S. has increased its market share.

Graphic: U.S. LNG cargo destinations - here

The dip in U.S. exports is expected to continue next month, with July and August cancellations yet to be reflected in deliveries.

Graphic: Spreads between gas prices in the U.S., Asia and Europe in 2020 - here

Winter cargoes are likely to go primarily to Asia where prices are expected to rise, traders said.

“We expect to see less cancellations in September and October, because even if prices are low, a price contango will pay for floating a cargo and delivering it at a higher price in winter,” said Trevor Sikorski, head of natural gas and carbon research at consultancy Energy Aspects.

Reporting by Ekaterina Kravtsova and Scott DiSavino; Editing by Veronica Brown and Kirsten Donovan

 


Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

                                  CMEGroup                                     Icelogo

FEATURED COLUMNS

Editorial Comment: China eyes continued expansion of smaller-scale LNG
-Adrienne Blume
Smaller-scale liquefaction in China, the world’s second-largest LNG importer, has experienced growth in recent years as China’s government integrates more gas into the country’s energy matrix.
Executive Q&A Viewpoint: SeaOne expands South American energy options with Compressed Gas Liquid technology
-Bruce Hall
SeaOne is a midstream infrastructure and logistics company that leverages its patented Compressed Gas Liquid (CGL™) technology to lower energy costs in various markets, generating new opportunities for economic growth and environmental stewardship.


GasPro 2.0: A Webcast Symposium

Register Now

Following the successful GasPro Webcast Symposium in October 2019, the third GasPro Webcast Symposium will take place on October 21, 2020.

The 2019 webcast drew attendees from around the world, with more than 80% of the audience working in company management or engineering divisions.

The 2020 web event will gather experts in the fields of LNG, gas processing and process safety to share market, operations and engineering technology and trends with our audience.

Attendees of the 2020 webcast will learn about market solutions and technology deployments in a number of areas: LNG delivery infrastructure, small-scale desulfurization for NGL, H2S removal for gas treating, process safety for safety instrumented systems, small-scale LNG project design, and advances in freeze component removal for LNG.

October 21, 2020 08:30 AM CDT

Register Now

 

Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2020 Gulf Publishing Holdings LLC.