Energize Weekly, April 4, 2018
U.S. exports of liquefied natural gas (LNG) quadrupled in 2017 compared to the previous year as global demand jumped 9.4 percent to 285 million metric tons a year, according to market analyses by the federal Energy Information Administration (EIA) and Bloomberg New Energy Finance.
After last year’s bump, the global demand is projected to rise 7 percent in 2018 to 305 million metric tons with a slowing of demand growth from 2019 to 2022 as new pipeline gas from Russia reaches China and more nuclear power comes on line in Japan, Bloomberg said.
From 2023 on, Bloomberg expects global imports rising at an annual rate of 5 percent until 2030.
Exports from the U.S. in 2017 reached 1.94 billion cubic feet per day with 53 percent going to three countries: Mexico, South Korea and China. Mexico received 20 percent of total U.S. exports in large part to fuel the power sector, according to the EIA.
U.S. exports to Asia were boosted by the growing gaps between the Henry Hub natural gas price, to which LNG contract prices are indexed, and crude oil price, which is used to benchmark LNG prices in Asia.
Exports to South Korea accounted for 18 percent of total U.S. LNG exports in 2017, including long-term contracts between sellers Cheniere Energy and Shell and the Korean natural gas buyers—utilities KOGAS and KEPCO.
Long-term contracts were the exception. Almost 60 percent of U.S. exports in 2017 were sold on a spot basis to more than 20 countries in Asia, North and South America, Europe, the Middle East and North Africa, and the Caribbean.
The prospects for growth of U.S. exports to Asia appear good. “The growth of demand in Asia and the continual push to reduce the cost of U.S. LNG will likely lead to new sales and purchase agreements for the U.S. products,” Bloomberg said.
“In 2022-23, South and Southeast Asia will become the main driver for the world’s LNG imports,” Maggie Kuang, head of Bloomberg’s Asia-Pacific LNG analysis, said in a blog.
The EIA said an additional spur to Asian demand through 2030 will be environmental measures in China, as well as increasing power generation in South and Southeast Asia, and a reduction in supplies from gas production in Europe.
In the last two years, two LNG projects—Sabine Pass in Louisiana and Cove Point in Maryland—have come online, increasing U.S. LNG export capacity to 3.6 billion cubic feet a day (Bcf/d).
Four more projects are slated to start up in the next two years—Elba Island LNG in Georgia, Cameron LNG in Louisiana, Freeport LNG and Corpus Christi LNG in Texas—raising export capacity to 9.6 Bcf/d.
The third largest export market was Europe. “LNG imports by several European countries increased in 2017, driven by increased demand primarily from the power generation sector,” the EIA said.
European imports are expected to grow faster than previously projected between 2018 and 2030 as natural gas production declines in Dutch and Norwegian gas fields and Europe “aims to keep its reliance on Russian pipeline gas under control,” Bloomberg said.
