US LNG Exports Hit New Peak

Construction Set to Continue Apace

Exports of liquefied natural gas from the U.S. have hit a new peak of 4.7 billion cubic feet per day, according to data published by the U.S. Department of Energy’s Office of Fossil Energy.

The record volume was recorded in May, and cements the country’s position as the world’s third-largest LNG exporter, as rapid construction of export facilities in recent years has spurred breakbulk activity predominantly in the Gulf Coast states.

The U.S. is expected to remain the third-largest LNG exporter in the world, behind Australia and Qatar, in 2019–20,” said Victoria Zaretskaya, principal contributor at the Energy Information Administration, or EIA. She noted that “U.S. LNG exports have increased as four new liquefaction units (trains) with a combined capacity of 2.4 billion cubic feet per day … came online since November 2018.”

European Demand Growing

With the addition of new export facilities at Sabine Pass Train 5, Corpus Christi Trains 1 and 2, and Cameron Train 1 in the last nine months, the U.S. has seen exports boom, with European growth leading as shipments to the continent have tripled over the last year.

“Although Asian countries have continued to account for a large share of U.S. LNG exports, shipments to Europe have increased significantly since October 2018 and accounted for almost 40 percent of U.S. LNG exports in the first five months of 2019. LNG exports to Europe surpassed exports to Asia for the first time in January 2019,” Zaretskaya said.

Europe’s total LNG imports last winter were 60 percent higher than for the previous two winters, averaging 10.2 billion cubic feet per day.

Asian LNG Spot Prices Fall

High spot prices in Asia dampened the outlook for U.S. exports to some degree over the period with LNG transport to Japan, China, and South Korea beginning to decrease in February 2019 due to a milder-than-normal winter Rising trade tensions between China and the U.S. have also heaped uncertainty over future demand for U.S. LNG exports.

“Because no long-term contracts between suppliers of U.S. LNG and Chinese buyers exist, LNG from the United States is supplied to China on a spot basis. Spot LNG shipments are dispatched based on the prevailing global spot LNG and natural gas prices, and the tariff made LNG imports from the United States to China less competitive,” the EIA stated.

Despite this assessment, the outlook for breakbulk activity related to the U.S. LNG industry remains extremely positive as the EIA predicts that a total of six U.S. liquefaction projects are expected to be fully operational by 2021with a further two projects expected to come online by 2025.