The US Energy Information Administration (US EIA) is reporting that daily natural gas deliveries to US LNG export facilities fell to less than 4.0Bn ft3 per day (Bcf/d) in June, well off the record 9.8 Bcf/d seen in late March 2020
The findings were based on data compiled by IHS Markit.
The sharp decrease is attributed to mild winter conditions in the northern hemisphere, demand destruction caused by the Covid-19 lockdown and high LNG storage inventories in Europe and Asia. Additionally, said US EIA, historically low natural gas and LNG spot prices in Europe and Asia have impacted the economic viability of US LNG exports, making them less competitive. US EIA said trade press reports indicate that over 70 US LNG cargoes were cancelled for June and July deliveries and another 40 for August.
It is a sharp turnaround of events for US LNG exports, demonstrating how Covid-19 has shaken up the market. By contrast, 74 LNG cargoes totalling 8.1 Bcf/d – record highs – were exported from the US in January 2020.
In 2019, on an annual basis, the US became the world’s third-largest LNG exporter behind Qatar and Australia.
Several US LNG export facilities became operational in 2019. In May 2020, the third train at the Freeport LNG export facility in Quintana Island, Texas began commercial operations, with addition trains coming online in Q3 2020 at Cameron LNG (Train 3) in Hackberry, Louisiana, and three moveable modular-liquefaction systems at Elba Island’s small-scale liquefaction facility in Chatham County, Georgia.
As a result of the start of commercial operations, US LNG liquefaction will grow to 8.9 Bcf/d of baseload LNG export capacity and 10.1 Bcf/d of peak export capacity.
Based on the number of cancelled cargoes, US EIA expects less than 50% of US LNG export capacity will be utilised during June, July, and August 2020.
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