U.S. Ranked as World's Leading LNG Exporter in December
As demand for natural gas soars in Europe, the United States has become the world's biggest exporter of LNG for the first time, according to numbers from ICIS LNG Edge. Reuters Refinitiv has independently confirmed the news.
Qatar and Australia have historically dominated the LNG export industry, but in December, they slipped behind American exporters on the Gulf and Atlantic coasts. ICIS predicts that the United States will remain the biggest LNG exporter in the world through 2022 as a whole, given sustained demand trends in Europe.
In December, European natural gas prices surged due to multiple factors. Amidst political tensions over Ukraine and the Nord Stream 2 pipeline, Russian state-owned supplier Gazprom reduced pipeline exports to Europe by 25 percent year-on-year in the fourth quarter, restricting the spot market relief that might normally be expected from Europe's largest single supplier. Gazprom has even been subtracting gas from the supercharged European market by running its Yamal-Europe pipeline in reverse - a trend that has continued unabated for more than two weeks, according to Reuters. Meanwhile, EU gas demand for heating is up, and demand for gas-powered electrical power generation has risen as well: low wind speeds periodically reduced the amount of wind power on the electrical grid, and two nuclear power plants in France have been offline for repairs.
As European gas prices spiked to record levels - fully a dozen times higher than U.S. Henry Hub benchmarks - a flotilla of LNG carriers rushed towards the EU, many diverting away from Asian destinations. The prices available on European spot markets have eclipsed even East Asian hub prices for LNG, a rare event, giving traders a lucrative opportunity. This has raised demand for American LNG cargoes, putting U.S. LNG export terminals into overdrive.
Given the ongoing fears of a Russian invasion of Ukraine, which could disrupt Gazprom's supply reliability, European demand for U.S. natural gas is expected to remain high.
"Global spot gas prices have dropped back from their record highs seen in mid-December, but remain extremely high in historical terms," said ICIS analyst Alex Froley, speaking to CNN.
According to the Energy Information Administration, America's total nameplate capacity for LNG export is on track to take first place worldwide by the end of 2022. From a starting point of zero in 2015, America's LNG output is expected to reach 106 million tonnes per annum (mtpa) by 2022 and 123 mtpa by 2024. Qatar will likely retake pole position later this decade: it has plans to expand production capacity to 126 mtpa and is assembling a gigantic LNG carrier fleet to carry its output to market.