US government report explores growing trends in the nation’s LNG export volumes and prices

Tuesday, 30 July 2019
Free Read

US exports of liquefied natural gas have been growing steadily to make the nation the world’s third-largest LNG exporter, averaging 4.2 billion cubic feet per day in the first five months of the year, exceeding Malaysia’s LNG shipments of 3.6 Bcf/d during the same period.

The US is expected to remain the third-largest LNG exporter in the world, behind Australia and Qatar, in 2019-2020.

“US shipments have risen as four new liquefaction Trains with a combined capacity of 2.4 Bcf/d, Sabine Pass Train 5, Corpus Christi Trains 1 and 2 and Cameron Train 1- started up since November 2018,” said the report from the US Energy Information Administration exploring current trends and prices.

“Although Asian countries have continued to account for a large share of US LNG exports, shipments to Europe have increased significantly since October 2018 and accounted for almost 40 percent of US LNG exports in the first five months of 2019,” added the EIA.

LNG exports to Europe surpassed exports to Asia for the first time in January 2019.

A warm winter in Asia and declining price differentials between European and Asian spot natural gas prices led to increased volumes of US LNG exports delivered to Europe.

Europe’s total LNG imports in the winter of 2018-2019 averaged 10.2 Bcf/d, 60 percent higher than in the previous two winters and the highest winter average since at least 2013.

“Total LNG imports in the three largest global LNG markets - Japan, China, and South Korea - started to decrease in February 2019 amid a milder-than-normal winter and, in Japan, the restart of nuclear power plants,” explained the report.

“Recent declines in price differentials between European pricing benchmarks (including National Balancing Point (NBP) in the UUK and Title Transfer Facility (TTF) in the Netherlands) and Asian spot LNG prices (including Japan LNG spot prices) have affected the flow of flexible (i.e., without a fixed destination specified in an offtake LNG contract) US LNG exports,” noted the EIA.

Because the round-trip transportation costs from the US Gulf Coast to Europe are about $1.50 per million British thermal units (MMBtu) lower than those to Asian markets, a sufficiently narrow price spread between European and Asian spot natural gas/LNG prices will make Europe the preferred destination for exporters of US LNG.

“The spread between Japan spot LNG and NBP/TTF prices was about $1.00/MMBtu in December 2018 and January 2019, and it reached a low of $0.60/MMBtu in April, which supported continued high US LNG exports to Europe,” said the EIA.

The EIA expects US LNG exports will continue to increase in 2019 as the first Trains at the two new liquefaction facilities (Freeport LNG in Texas and Elba Island LNG in Georgia) come online in the next few months.

In its latest Short-Term Energy Outlook, the EIA forecasts US LNG exports will average 4.8 Bcf/d in 2019 and 6.9 Bcf/d in 2020 as new liquefaction Trains at Cameron, Freeport, and Elba Island are commissioned in the next 18 months.

“By 2021, six US liquefaction projects are expected to be fully operational. Another two new US liquefaction projects (Golden Pass in Texas and Calcasieu Pass in Louisiana) that started construction this year are expected to come online by 2025,” stated the report.

Related Video

Free Read