One-in-five LNG cargoes setting sail from Sabine Pass are heading to Mexico this year while demand from Argentina and Brazil remains sluggish. Mexico imported 29 cargoes from the US in H1-2018, according to data from the U.S. Department of Energy (DoE).
Shipments of U.S. shale gas liquefied and exported from February 2016 through June 2018 were mostly headed for Mexico, South Korea, China or Japan. A total of 80 cargoes, carrying a volume of over 273 billion cubic feet (Bcf) of liquefied natural gas was exported to Mexico, which made up 19.8% of total U.S. LNG exports.
Second in line is South Korea, with 73 cargoes received carrying a total of 250 Bcf which amounts to 18.1% of total US LNG exports. China and Japan come in third and forth, with 54 and 31 cargoes received, respectively.
Mexico’s regas terminals include:
• Costa Azul LNG 14 miles (23 km) north of Ensenada, Mexico, Sempra Energy, opened May 2008, first one on West Coast of North America.
• Altamira LNG near Tampico, Mexico, Shell, opened August 2006
• Manzanillo LNG in Manzanillo, Colima, Mexico, Mitsui + Korea Gas + Samsung, opened 2011
As for prices, Mexico tends to get better deals than Japan. The tanker BW Pavilion Leeara, shipping on behalf of GAIL Global, has set sail from Dominion Energy’s Cove Point LNG terminal on June 19, 2018 with a cargo of 3,240,033 million cubic feet of natural gas at price at export point of $6.59/MMBtu. In contrast, the LNG Jurojin tanker, was carrying 2,525,553 Mcf of gas to Japan from Cove Point to Japan at a price at export point of $8.16/MMBtu.
Brazil turns to Bolivian pipeline gas
Though shipping costs to South America are significantly lower to than to far-flung markets in East Asia, countries like Brazil and Argentina have reduced their offtake of US LNG as they are turning to Bolivia for more pipeline gas supplies. Brazil imported just 12 cargoes of US LNG from February 2016 through June 2018, while Argentina has offtaken 16 cargoes over the same period.
The UK, meanwhile, imported three cargoes with a total volume of 9.7 Bcf which brings Britain’s percentage of total US LNG exports to 0.7%. Analyst see much upside and, in fact, the UK has often been singled out as ‘the market of last resort’ for US gas exports, notably in the event of reduced profit margins in Asia – either due to tariffs or policy-related demand reductions as Asian governments start to favour green energy sources.