US LNG exports surged in the first half of this year, boosted by high spot LNG prices in Asia and Europe, according to the Energy Information Administration (EIA).
In the January-June period, US LNG exports averaged 9.6 billion cubic feet per day, an increase of 42%, or 2.8 Bcf/d, compared with the same period in 2020, the agency said in a report on Tuesday.
During the summer months of 2020, US LNG exports fell to record lows, but they set consecutive record highs in November and December, EIA said.
Cold weather boosted spot LNG prices
US LNG exports rose in the first half of this year as international natural gas and LNG spot prices increased in Asia and Europe due to cold weather.
Rising global LNG demand once Covid-19 restrictions began to ease, as well as continuous unplanned outages at LNG export facilities in several countries, contributed to increased US exports, according to EIA.
These outages included facilities in Australia, Malaysia, Nigeria, Algeria, Norway, and Trinidad and Tobago.
In Asia, colder-than-normal winter temperatures led to increased demand for spot LNG imports.
Natural gas demand in the spring continued to rise amid low post-winter inventories, which contributed to unseasonably high natural gas prices.
The high prices prompted a higher demand for more flexible LNG supplies, particularly from the US, EIA said.
In Europe, natural gas storage inventories were also low following a cold winter.
Increasingly hot temperatures in May and June and greater natural gas demand from the electric power sector contributed to high natural gas spot prices.
Europe’s natural gas spot prices have historically been lower than prices in Asia; however, this year, Europe’s natural gas prices are tracking Asia’s spot LNG prices more closely to attract flexible LNG supplies from around the world to refill storage inventories, EIA said.
Price difference and capacity additions
The US Henry Hub natural gas benchmark and US spot LNG market prices have been lower than prices for international natural gas and spot LNG this year.
This price difference has supported record volumes of US LNG exports, EIA said.
Moreover, US LNG exports also increased because of new export capacity added in 2020.
The new units increased total US LNG export capacity by a combined 2.7 Bcf/d for a total peak capacity of 10.8 Bcf/d.
Asia remains top destination
Similar to 2020, Asia remained the top destination for US LNG exports from January through May in 2021, accounting for 46% of the total, EIA said.
Asia was followed by Europe, which had a five-month average share of 37%. Exports to Latin America also increased, particularly to Brazil, which is experiencing its worst drought in more than 90 years, EIA said.
In June, US LNG exports declined slightly, mainly as a result of maintenance on several pipelines that deliver natural gas to LNG export facilities.
Yet, EIA expects LNG exports to remain at high levels in the remaining months of this year, the agency said.