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Asia becomes top destination for US LNG exports

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US LNG exports grew by 31% in 2020, underpinned by demand from Asia, with additional liquefaction capacity set for FID in 2021

Despite the global pandemic, US LNG exports grew 31% year-on-year in 2020, driven by increased exports to Asia and China during a bitter winter season. In the decade ahead, Asia, Southeast Asia and China will become primary destinations for US LNG cargoes as Europe increasingly moves towards renewables, according to a leading analyst.

Poten & Partners head of Asia business intelligence Sophie Tan expects China to become the biggest player in the global LNG market in the mid-2020s, as Japan switches from gas to nuclear power and taps into the country’s large offshore wind potential. While LNG demand from China will grow to 2030, its market share will remain stable at about 18%, as countries in South Asia and Southeast Asia become increasingly important gas buyers.

Speaking in March at Poten & Partner’s LNG Investment Cycle: Is 2021 the Year LNG Project Development Shifts into High Gear? webinar, Ms Tan said by 2030, the ‘Big Five’ LNG producing nations – Qatar, the US, Australia, Russia and Mozambique – will account for 73% of global LNG supply.

“Asian buyers are getting incremental supply from projects over longer shipping distances,” she observed. “So that means shipping capacity will have to increase over time in the long term, but in the next few years, we’ll see that there is a slight excess of shipping capacity.”

She expects the share of US LNG supply will rise from 10% to 20% by the end of decade, underpinned by increasing liquefaction capacity. Covid pushed FID on several LNG projects to the right in 2020. Of the 19 planned liquefaction projects, totaling 197M tonnes per annum (mta) of capacity, due for FID, most are in the US, pointed out Ms Tan. Indeed, nine of the projects are in the US – all in the US Gulf – totaling 123.45 mta of liquefaction capacity. Six of those nine projects, totaling 99.05 mta, will come up for FID in 2021, according to Poten & Partners.

US LNG expansion projects
Project mta Original FID New FID Orig. in service Operator
Port Arthur 13.5 2020 2021 2024 Sempra
Corpus Christi Phase 3 10 2020 delayed 2024 Cheniere
Rio Grande LNG 27 2020 2021 2024 NextDecade
Driftwood LNG 27.6 2020 2021 2024 Tellurian
Freeport T4 4.5 2020 2021 2024 Freeport LNG
Placquemines LNG 10 2020 2021 2024 Venture Global
Lake Charles 16.45 2020 2021 2025 Energy Transfer
Annova LNG 6 Q2 2020 delayed 2024 Excelon
Commonwealth LNG 8.4 Q1 2020 Q1 2022 2024 Commonwealth LNG
Total 123.45
Source: Poten & Partners

Record 2020

As for 2020, US LNG exports reached record levels, averaging 6.5 billion cubic feet per day (bcfd) on an annual basis, up 1.5 bcfd over 2019, according to the US Energy Information Administration’s Natural Gas Monthly.

Not surprisingly, 2020 was a roller coaster year for US LNG exports, showing strength between January through May 2020, dipping to record low volumes in mid-year, followed by record highs in Q4. The decline in mid-year exports was shaped by soft international natural gas and LNG prices. By October, US LNG exports started to increase again, despite brief interruptions in liquefaction production caused by a series of hurricanes that battered the US Gulf, where the bulk of American LNG is produced.

US LNG exports hit record levels in December, reaching 304.1 bcf. The top five destinations for cargoes were Japan (54.0 bcf), China (45.5 bcf), South Korea (39.6 bcf), United Kingdom (30.4 bcf) and Brazil (29.9 bcf).

For the month, 90 cargoes were shipped from US LNG export facilities, led by Cheniere Energy’s Sabine Pass Liquefaction (32 cargoes, 109.4 bcf), followed by Freeport LNG, (17, 58.5 bcf), Cameron LNG (17, 55.1 bcf), Corpus Christi (15, 51.8 bcf), Cove Point (6, 20.4 bcf) and Elba Island (3, 8.9 bcf).

For 2020, the average price for US LNG ranged from US$4.49 per million BTU (MMbtu) in April to a high of US$6.22 per MMbtu in November, according to US DOE.

US LNG exports in 2020, by month
(volume by bcf)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Sabine Pass 114.3 98.0 98.0 91.7 77.6 26.9 30.2 29.3 61.7 88.3 101.4 109.4 926.8
Cove Point 20.5 20.2 23.6 16.7 20.1 21.0 20.2 17.0 17.1 10.6 23.4 20.4 230.8
Corpus Christi 40.6 41.2 41.6 34.3 23.5 8.5 10.6 17.1 37.5 44.1 45.0 51.8 395.8
Cameron 26.7 27.8 34.4 35.8 32.3 37.6 31.3 31.8 0.0 18.3 50.6 55.1 381.7
Freeport 41.4 38.5 46.5 31.9 28.7 14.9 3.7 11.3 31.0 53.8 53.7 58.5 413.9
Elba Island 6.1 0.0 0.0 0.0 0.0 0.0 0.0 3.7 3.7 7.5 6.5 8.9 36.4
Total 249.6 225.7 244.1 210.4 182.2 108.9 96.0 110.2 151.0 222.6 280.6 304.1 2385.4
Source: US Department of Energy

Asia led by China a primary driver

In 2020, US LNG producers exported to 38 countries – a record number – with Asia overtaking Europe to become the main export destination.

LNG exports to Asia increased 67% in 2020 compared with 2019, accounting for almost half, or 3.1 Bcf/d, of all US LNG exports. Chinese imports of US LNG averaged 0.6 Bcf/d in 2020—after it lowered its tariffs from 25% to 10%.

By contrast when tariffs were at 25% in 2019, only two US LNG cargoes were shipped to China. India increased imports of US LNG by an average of 0.1 Bcf/d, especially in the spring and summer when LNG prices were at record lows. US LNG exports to Japan grew by 0.2 Bcf/d, primarily in Q4 2020 because of seasonal winter demand.

Historically, South Korea has been the biggest buyer of US LNG since 2018 when the first US cargo from the lower 48 states was shipped from Cheniere Energy’s Sabine Pass Liquefaction facility in Louisiana. From February 2016 to December 2020, 281 cargoes, totaling 978.8 bcf, of LNG have been exported to South Korea, accounting for 15.8% of US LNG exports. Japan (11%), Mexico (8.5%), China (7%) and Spain (6.6%) round out the top five, according to the US Department of Energy.

US LNG exports to Europe averaged 2.5 Bcf/d, an increase of 0.6 Bcf/d compared with 2019. In 2019, Europe had been a saviour for US LNG, accounting for 39% of exports. In 2020, US LNG exports to Turkey increased by 0.3 Bcf/d and to the UK, Spain, Greece, and Lithuania by 0.1 Bcf/d each.

Historically, the UK is the sixth largest importer of US LNG, receiving 101 cargoes totaling 333.3 bcf, or about 5.4% of all cargoes from February 2016 to December 2020.

US LNG exports to several countries in Latin America (Colombia, Chile, Argentina, Mexico) and the Middle East (Jordan and the United Arab Emirates) declined by a combined 0.5 Bcf/d in 2020 compared with 2019.

US LNG exports to Mexico declined by 0.3 Bcf/d, eroded by a combination of the Covid lockdown, energy demand destruction and increasing natural gas imports displacing more expensive LNG.

Brazil more than doubled its US LNG imports – an average annual increase of 0.2 Bcf/d – as a result of drought conditions that limited hydroelectric power generation and increased demand for natural gas-fired power generation.

Source :Riviera

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