U.S. LNG exports reach new peak in May

Illustration purposes only (Image courtesy of NYK Line)

U.S. exports of LNG have reached a new peak of 4.7 bcf per day in May 2019, according to the latest data published by the U.S. Department of Energy’s Office of Fossil Energy.

The Energy Information Administration (EIA) said on Monday that the U.S. became the world’s third-largest LNG exporter this year, averaging 4.2 bcf/d in the first five months of the year.

This exceeds Malaysia’s LNG exports of 3.6 bcf/d during the same period. The United States is expected to remain the third-largest LNG exporter, behind Australia and Qatar in 2019–20.

According to the EIA, U.S. LNG exports increased following the start-up of four new liquefaction trains since November 2018 – Sabine Pass Train 5, Corpus Christi Trains 1 and 2, and Cameron Train 1 – with a combined capacity of 2.4 bcf/d.

It is worth noting that, although Asian countries continued to account for a large share of U.S. LNG exports, shipments to Europe increased significantly since October 2018 and accounted for almost 40 percent of exports in the first five months of 2019. LNG exports to Europe surpassed exports to Asia for the first time in January 2019.

Europe’s total LNG imports in the winter of 2018–19 averaged 10.2 bcf/d, 60 percent higher than in the previous two winters and the highest winter average since at least 2013, according to Cedigaz LNG data.

Total LNG imports in the three largest global LNG markets—Japan, China, and South Korea—started to decrease in February 2019 amid a milder-than-normal winter and restarts of nuclear power plants in Japan.

The world’s second-largest LNG importer, China, continued to increase LNG imports. Its LNG imports were 20 percent (1.3 bcf/d) higher in the first five months of 2019 compared with the same period last year due to implementing coal-to-gas switching policies.

U.S. LNG accounted for 7 percent of China’s total LNG imports in the first six months of 2018. In September 2018, China imposed a 10 percent tariff on LNG imports from the United States, and in the months since then (October 2018 through May 2019), U.S. LNG accounted for 1 percent of China’s LNG imports.

EIA added that round-trip transportation costs from the U.S. Gulf Coast to Europe are lower than those to Asian markets, a sufficiently narrow price spread between European and Asian spot natural gas/LNG prices will make Europe the preferred destination for exporters of U.S. LNG.

The Administration expects U.S. LNG exports to increase in 2019 as the first trains at the two new liquefaction facilities – Freeport LNG in Texas and Elba Island LNG in Georgia – come online in the next few months. EIA forecasts U.S. LNG exports will average 4.8 bcf/d in 2019 and 6.9 bcf/d in 2020 as new liquefaction trains at Cameron, Freeport, and Elba Island are commissioned in the next 18 months.

By 2021, six U.S. liquefaction projects are expected to be fully operational. Another two projects – Golden Pass in Texas and Calcasieu Pass in Louisiana – that started construction this year are expected to come online by 2025. By that time, EIA projects that the U.S. will have the world’s largest LNG export capacity surpassing both Qatar and Australia.