US LNG exports to Europe increase amid declining demand and spot LNG prices in Asia
US exports of LNG have been growing steadily and reached a new peak of 4.7bn cf/d in May 2019, according to the latest data published by the US Department of Energy’s Office of Fossil Energy. This year, the US became the world’s third-largest LNG exporter, averaging 4.2bn cf/d in the first five months of the year, exceeding Malaysia’s LNG exports of 3.6bn cf/d during the same period. The US is expected to remain the third-largest LNG exporter in the world, behind Australia and Qatar, in 2019–2020.
The US Energy Information Administration (EIA) reports that US LNG exports have increased as four new liquefaction units (trains) with a combined capacity of 2.4bn cf/d – Sabine Pass train 5, Corpus Christi trains 1 and 2, and Cameron train 1 – came online since November 2018. Although Asian countries have continued to account for a large share of US LNG exports, shipments to Europe have increased significantly since October 2018 and accounted for almost 40% of US LNG exports in the first five months of 2019. LNG exports to Europe surpassed exports to Asia for the first time in January 2019.
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, in Japan, the restart of nuclear power plants. China, which became the world’s second largest LNG importer in 2017 (surpassing South Korea) and the world’s largest importer of natural gas in 2018 (surpassing Japan and Germany), continued to increase LNG imports. Its LNG imports were 20% (1.3bn cf/d) higher in the first five months of 2019 compared with the same period last year as the country continued to expand LNG import capacity and implement coal-to-gas switching policies.
LNG from the US accounted for 7% of China’s total LNG imports in the first six months of 2018. In September 2018, China imposed a 10% tariff on LNG imports from the US, and in the months since then (October 2018 through May 2019), US LNG has accounted for 1% of China’s LNG imports, according to the EIA.
The EIA expects US LNG exports will continue to increase in 2019 as the first trains at the new liquefaction facilities at Freeport LNG in Texas and Elba Island LNG in Georgia come online in the next few months. It forecasts US LNG exports will average 4.8bn cf/d in 2019 and 6.9bn cf/d in 2020.
By 2021, six US 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 US will have the world’s largest LNG export capacity, surpassing both Qatar and Australia.