Figures from the U.S. Department of Energy (DOE) show Cheniere's LNG
export facility in Sabine Pass along the Louisiana-Texas border shipped
51.24 billion cubic feet (bcf) of LNG in the month. These volumes were
carried on 15 separate vessel transits, some of which carried
part-cargoes to multiple destinations.
The January export figure surpassed the 41.8 bcf record set in
December 2016, and came in the wake of the 2016 export total of 186.46
bcf compiled after the U.S. mainland's first export cargo sailed from
Sabine Pass in February last year.
Thanks to this total, vessel-borne U.S. LNG exports surpassed imports
in 2016. Government forecasts call for the nation to become a net
exporter of all natural gas by next year.
Sabine Pass LNG export volumes are expected to grow as Cheniere's
infrastructure is expanded. Two liquefaction plants, or trains in LNG
parlance, are already on stream at the location. Cheniere has plans for
six such trains at Sabine Pass, each with a nameplate LNG production
capacity of approximately 4.5 million mt per year. Five trains are
projected to be in operation by end-2019, according to Cheniere's
regulatory filings.
A commissioning cargo has already been produced from the third train,
while the company recently filed regulatory paperwork on the fourth
train which is expected to start producing in the second half of this
year.
Freeport LNG Development's terminal in Texas is expected to start
exporting LNG next year. The company website gives its nominal export
capacity as 13.9 million mt a year. Cheniere's Corpus Christi LNG export
facility, with a nameplate capacity of 22.5 million mt per year, is
expected to start in 2019, among at least three other projects scheduled
for start-up stateside through 2021.
Cheniere's pioneering year in 2016 has already put the company on a
path out of financial wilderness. Three weeks ago, Cheniere announced a
landmark fourth-quarter 2016 net profit of $85.35 million compared with
the corresponding 2015 final-quarter net loss of $56 million. The bottom
line benefited from the debut of the first two trains by September
2016, which saw 24 LNG cargoes head out of Sabine Pass in the fourth
quarter.
Cheniere's efforts illustrate the wider turnaround in the U.S. LNG
shipping space. Imports were seen as a rising industry in the early
2000s, with the annual figure peaking at 770.81 bcf in 2007. Ship owners
invested in tonnage while shoreside locations such as Sabine Pass did
so with regasification equipment.
As the shale gas revolution and 2008-2009 economic developments
redefined the industry, Cheniere in 2011-2012 took the lead in
developing liquefaction facilities adjacent to its regasification
complex.
Latest DOE figures show Sabine Pass LNG had been shipped to 19
nations by January. Mexico was the largest single importer with 41.48
bcf on 14 cargoes, including five in January alone. Other notable
importers were Chile, Japan, China and India, as well as Jordan in the
LNG-rich Middle East.
LNG optimists believe in the future of U.S. exports, given the
nation's shale resources and commitment to developing export
infrastructure. Development cost overruns in Australia, a leading LNG
exporter, and a moratorium in current world leader Qatar could make the
U.S. the world's LNG supplier of choice, according to this view.
However, Moody's said in a recent research note that it expects world
LNG prices to "remain constrained beyond 2020 as a wave of fresh supply
capacity comes online at a time when demand from the world's largest
importers is weakening."
Moody's said global LNG supply will swell 44% by 2020 to 455 million
mt per annum on new construction projects in Australia, the U.S. and
Russia, while the effects of the 2011 Japan tsunami and the subsequent
nuclear shutdown will be on the wane.
"Strong LNG demand growth from China, India and new markets will not
be enough to absorb the fresh supply capacity coming online,
particularly with demand falling in the largest importing countries,
Japan and Korea. The market will not rebalance until the early years of
the next decade, when global demand and LNG import infrastructure
catches up with supply," said Tomas O'Loughlin, Moody's vice president
and senior credit officer.
According to Moody's, imports into Japan, which consumes over
one-third of global LNG, will fall to 80 million mt per annum by 2020, a
9% reduction from its 2014 record, as nuclear power production slowly
restarts. Demand from Korea, the world's second-largest consumer, will
also be flat over this period, Moody's noted.
"Until the market rebalances, investment returns for developers of
Australian projects will be weak and U.S. LNG offtakers will struggle to
recover all of their liquefaction costs," O'Loughlin added.
Cheaper LNG from nearby Australia could make U.S. supplies unfeasible
for Japan in this scenario, though the U.S. can still count on Mexico
and possibly Europe to receive its exports.
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