LNG exports more than triple in 2017

by Talk Business & Politics staff ([email protected]) 143 views 

U.S. exports of liquefied natural gas (LNG) increased 288% to 1.94 billion cubic feet per day in 2017, from 0.5 billion cubic feet per day in 2016, according to the U.S. Energy Information Administration. In 2017, exports went to 25 countries, and they all originated from the Sabine Pass liquefaction terminal in Louisiana.

More than half of the exports went to Mexico, South Korea and China. Mexico received 20% of the exports in 2017. Natural gas demand has risen, largely in the power generation sector, and because of delays in the construction of pipelines connecting to U.S. export facilities, Mexico has been relying on LNG imports to meet demand.

In Asia, the widening price difference between Henry Hub natural gas and crude oil has led to a rise in imports from the United States, according to the EIA. U.S. LNG contract prices are indexed on the Henry Hub price, and crude oil is used as a benchmark for prices in Asia. In 2017, South Korea received 18% of U.S. LNG exports as part of long-term contracts between sellers Cheniere Energy and Shell and buyers in Korea — utilities KOGAS and KEPCO. China received 15% of U.S. LNG exports, and they were sold mostly in the spot market. Volumes increased in October, November and December as a result of record-high LNG demand, leading China to purchase LNG on the global spot market to meet demand.

Nearly 60% of U.S. LNG in 2017 was sold in the spot market to more than 20 countries in Asia, North and South America, Europe, the Middle East, North Africa and the Caribbean. The liquefaction capacity at Sabine Pass is under long-term contracts, but the flexibility of the contracts allows U.S. LNG to be shipped to any market in the world.

Countries in Europe accounted for the third-largest share of U.S. LNG exports. Exports to the countries has risen as a result of increased demand in the power generation sector. In South America, demand fell as a result of the competing lower-cost natural gas supply and hydro generation output.

Over the past two years, exports have risen as U.S. LNG export capacity increased. Since 2016, two LNG projects have been completed, increasing U.S. export capacity to 3.6 billion cubic feet per day. Over the next two years, four projects are set to be completed and will increase the export capacity to 9.6 billion cubic feet per day. By 2020, the United States is projected to become the third-largest exporter of LNG, surpassing Malaysia and behind only Australia and Qatar.