GIIGNL: LNG Trade Up 9.4 Percent in 2011

In 2011, global LNG trade grew by 49.4 106 m3 (20.7 Mt), a growth of 9.4% compared with 2010, according to GIIGNL’s 2011 LNG industry report.

As during the previous year, the main contribution to the increase of LNG flows came from Qatar, as the country was responsible for 67% of additional LNG produced in 2011. For the largest part, the remaining additional volumes produced in 2011 resulted from the build-up of the newly commissioned liquefaction facilities in Peru and in Yemen.

On the import side, LNG consumption in Asia continued to grow strongly (+14.8%), reaching a total of 153.0 Mt in 2011, i.e 63.6% of the world’s LNG trade. However, the Asian growth rate was reached in specific circumstances, considering the sharp increase in Japanese LNG demand which resulted from the loss of nuclear power generation capacity.

Not surprisingly, at the end of 2011, Japan stands out as the world’s n°1 LNG importer with 79.1 Mt, compared to 70.9 in 2010 (+11.6%). Japan accounted for 41.6% of Asia’s additional LNG’s imports in 2011 and the country’s share of global LNG imports increased from 31.6% in 2010 to 32.8%.

With LNG imports growing by 8.9% and total imports representing 35.6 Mt, Korea ranked second. Its share of the global LNG market remained nevertheless unchanged at 14.8%.

Due among other factors to the lower than expected domestic production, India experienced Asia’s fastest growth rate in LNG demand (+37.4% over 2010), closely followed by China (+36.1%). As a result of economic recovery. Taiwan also recorded a strong increase in LNG imports (+9.1%). In Asia, Thailand became an LNG importer during the year, with 0.8 Mt imported through the newly commissioned Map-Ta-Phut terminal during the year.

After a sharp rebound in 2010 (+24.8%), European imports barely increased by a mere 0.4%, with Qatari LNG volumes into the UK representing the greatest part of additional LNG imported into Europe. Spanish LNG imports experienced the most remarkable decline (-16.3%), followed by Turkey (-14.6%). The Netherlands joined the ranks of LNG importing countries with 0.6 Mt (8 cargoes) delivered at Gate Terminal during the year. For the first time, the UK overtook Spain as the world’s third largest LNG importer, with 18.4 Mt imported during the year, 87.5% of the volumes coming from Qatar.

In North America, LNG imports into the U.S.A (net of re-exports) continued to decline (-25.1%), mainly due to the sustained high level of non-conventional domestic gas production. As a result of the low price environment in North America, LNG imports into Mexico also dropped, by 33.7%. Re-exports of cargoes from the U.S.A jumped by 75.2%, reaching a total of 1.0 Mt (19 cargoes).

In the short-term markets of South America, LNG demand continued to grow on average (+13.8%). With strong annual GDP growth rates, Argentina and Chile confirmed their current strong thirst for LNG, importing a combined 5.7 Mt during the year, i.e a 66% increase over 2010. However, due to a larger output from hydroelectric facilities in 2011, Brazilian LNG consumption dropped by 70.9%, contributing to maintain the global LNG market share of South America around a stagnant 2.6%. In newcomers Kuwait and Dubai, LNG deliveries almost doubled in 2011, reaching a combined 3.7 Mt.

Overall, the total market share of Asian LNG buyers grew to 63.6%, while Europe and the Americas respectively recorded a 2.6% and 1.6% loss in market share to respectively 27% and 7.9%.

On the export side, Qatar reinforced its leading position, supplying 31.3% of global LNG (75.4 Mt). With 10.3% of global LNG supplies, Malaysia re-gained its second rank over Indonesia (9.1%) following the reduced output from Arun and the ramp-up of production from MLNG Dua. With 18.7 Mt of additional LNG sold throughout the world, Qatar accounted for 67% of the global trade growth during the year, followed by Peru (9%) and Yemen (9%). To a lesser extent, Malaysia, Nigeria and Russia also contributed to the growth by increasing their production rates.

For the first time and before the start-up of new Australian liquefaction projects, the Middle East (39.7% of global exports) overtook the Pacific Basin (36.5%) as the largest source for LNG. On the contrary and for the second year in a row, the Atlantic Basin recorded a decline in exported volumes (-4.8%), with negative production growth rates in all countries except Nigeria and Equatorial Guinea. The decrease was particularly strong in Algeria (-1.7 Mt) due to transmission issues and to the decommissioning of GL4Z.

After a 40% increase in 2010, spot and short-term LNG trade (defined as LNG traded under contracts with a duration of 4 years or less) recorded again a jump in 2011, this time by 50%, reaching 61.2 Mt (994 cargoes), i.e more than a quarter of the total LNG trade (25.4%).

As to the sourcing, one third of LNG volumes traded on a spot or short-term basis came from Qatar, followed by Nigeria 12% and Trinidad and Tobago (11%). In 2011, Qatar exported 26.7% of its total production on a spot or short-term basis. In terms of inter-regional flows, it must be highlighted that spot and short-term volumes exported from the Atlantic Basin to Asia recorded a twofold increase in 2011, reaching 12.7 million tons.

Asia attracted 60.9% of global spot and short-term volumes (37.3 Mt), compared with 43.6% (17.8 Mt) in 2010. This can primarily be explained by the increased LNG needs following the March 2011 events in Japan, where spot and short-term imports skyrocketed to 16.0 Mt (+123.5%) during the year, vs 7.2 Mt in 2010. In Korea, the annual volume of spot and short term LNG imports almost doubled, reaching 10.7 Mt (+96%). Spot and short-term imports more than doubled in China and almost tripled in India, with both countries importing a combined 6.5 Mt of LNG under this type of contracts.

On the contrary, Europe’s spot and short-term LNG imports decreased by 7.8% (12.3 Mt). In the Americas, spot and short-term LNG trade recorded very strong growth rates in all countries except in the US and in Brazil, where it decreased by 32% and 71% respectively.

A total of 44 cargoes were re-loaded during the year, compared with 19 cargoes in 2010. Re-exported volumes were delivered to 13 countries, 14 cargoes being re-exported from the Atlantic Basin to Asia and 11 cargoes to South America (Argentina, Brazil, Chile).

At the end of the year, at least two cargoes re-exported from the U.S.A and one cargo re-exported from Spain were still out at sea. They were delivered in January 2012 respectively in Brazil, in South Korea and in Italy. One cargo delivered in Kuwait was a re-export from Brazil and was counted as LNG from Qatar in the present study. One cargo of Indonesian LNG delivered in Mexico (Costa Azul) was re-exported to Chile (Quintero) under a swap agreement.

You can find the entire GIIGNL’s 2011 LNG industry report at www.giignl.org

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LNG World News Staff, May 18, 2012; Image: Gate LNG