US LNG exports hit record high in December

US exports of LNG set a new record in December averaging 9.8 billion cubic feet per day, according to the Energy Information Administration.

This follows record high exports in November as well.

The agency says US LNG exports in December were more than three times higher than the reduced export levels in the summer of 2020.

Several factors have contributed to higher levels of US LNG exports in recent months.

LNG demand increased due to colder-than-normal winter temperatures in key Asian LNG-consuming markets.

Moreover, supplies of LNG decreased because of unplanned outages at LNG export facilities in Australia, Malaysia, Qatar, Norway, Nigeria, and Trinidad and Tobago, EIA said.

Higher prices

Reduction in LNG supply led to higher international natural gas and LNG prices in Asia and Europe, attracting higher volumes of flexible LNG supplies from US, the agency said.

From April to July 2020, natural gas and LNG prices in Asia and Europe have declined to all-time historical lows, which affected economic viability of US LNG exports and led to numerous cargo cancelations.

Prices began to recover in August, and by December, prices have more than quadrupled compared to the low levels of the summer months, EIA said.

The JKM price benchmark (representing spot and forward LNG prices in Japan, South Korea, Taiwan, and China) averaged $10.82 per million British thermal units in December 2020, and the TTF—a key European price benchmark—averaged $5.80/MMBtu.

By the end of December, JKM prices continued to increase and reached $15.10/MMBtu on December 31, 2020—the highest level in the last seven years, according to pricing data provided by S&P Global Platts.

Since mid-October, natural gas and LNG prices in global spot and futures markets have exceeded prices in crude oil-indexed long-term LNG contracts. Although deliveries under long-term contracts (which account for 70% of global LNG trade) have been increasing since September 2020, supply shortages caused by unplanned outages at various LNG export facilities worldwide reduced contractual export volumes.

Spot LNG rise

Higher global prices and reduced exports under term contracts resulted in higher export volumes of flexible LNG, particularly from the United States, EIA said.

The majority of US LNG export contracts do not have fixed destinations in contractual clauses, allowing exporters of US LNG to ship it on a spot and short-term basis to the highest-priced markets worldwide.

Since June 2020, more than 50% of US LNG exports went to countries in Asia, about 30% to countries in Europe, and the remaining volumes to countries in the Middle East, Africa, and Latin America, according to the US Department of Energy’s LNG reports and EIA’s data for November 2020.

EIA expects US LNG exports to remain at record-high levels this winter. In the December 2020 short term energy outlook, EIA forecasts that LNG exports will average 9.5 Bcf/d in the first quarter of 2021 and 8.5 Bcf/d on an annual basis this year, a 30% increase from 2020.

Weekly exports down

As per weekly shipments, the US twenty one LNG cargoes in the week ending January 6, down from the week before, EIA said. The total capacity of LNG vessels carrying these cargoes is 77 Bcf.

Cheniere’s Sabine Pass plant sent seven shipments during the week December 31-January 6 while its Corpus Christi plant dispatched four.

Additionally, Freeport dispatched five cargoes of the fuel while the Cameron terminal shipped four cargoes.

Cove Point sent one shipment during the observed week.

Compared to the previous week, the Henry Hub spot price rose from $2.30/MMBtu last Wednesday to $2.70/MMBtu two days ago, EIA said.

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