Despite multiple cargo cancellations this summer, a sharp increase in U.S. liquefied natural gas (LNG) output in the past year has bolstered the company’s export status. Over 21 million tonnes per year of U.S. LNG capacity was added in 2019 and more than 16 million tonnes in 2020, contributing heavily to a global gas glut.
As the coronavirus pandemic pressured demand and prices, flexibility built into U.S. LNG contracts allowed buyers to cancel multiple cargoes. However, although exports have been dropping throughout 2020 and individual projects have been impacted by rejections, U.S. exports and deliveries to Asia and Europe remain much higher than a year ago.
Analysts said massive production capacity supported U.S. LNG, with strong exports achievable when the price differential between the U.S. and other markets is wide enough.
Jack Weixel, Senior Director for gas, power and energy futures at IHS Markit, said: “What we saw in the first half of the year…was primarily the result of newly expanded terminal capacity and low prices, wherein a spread still existed to Europe and Asia from the Gulf (of Mexico).”
The U.S. exported 26.5 million tonnes of LNG in January to July this year, a 41% jump on the year earlier period, Refinitiv Eikon data showed.
Xi Nan, Vice President, gas and power markets at Rystad Energy, said he expects the U.S. to produce 55 million tonnes of LNG in 2020, a 53% increase from 2019.
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