LNG exports would increase 80% by the middle of the next decade: S&P

LNG exports up 80% in next decade

Liquified natural gas exports could increase by 80%, in comparison with 2020’s levels by the middle of the next decade, according to an analysis by S&P Platts.

Despite of the demand shocks prompted by the coronavirus pandemic and the continued commercial struggles, 2020 was a great year for U.S. LNG. As we’ve reported previously, on December LNG exports by cargo and by pipelines hit their highest record to date.

And the industry expects to have an increase of 30% through February, 2021, compared to 2020’s same period. Just this Friday, the Department of Energy extended export permissions for seven major LNG export projects until 2050, ensuring the business viability for years.

According to S&P, nearly a dozen of new projects are actively being developed along North America, through Mexico, Canada and the U.S. But, for those, financing, investment and climate change policies will be their main challenges.

In 2020, a year in which LNG projects were supposed to move forward, only Sempra’s Costa Azul in Baja California Mexico had the greenlight to go forward. Many others, like Sempra’s Port Arthur; NextDecade’s Rio Grande LNG projects in Texas; Tellurian’s Driftwood and Energy Transfer’s Lake Charles, in Louisiana, remain at suspense.

Recommended to you: 7 major LNG projects have export permits extended to 2050

Exports pushed by Asian demand

Other projects with Europe ties are being delayed, as in Europe green policies and zero emissions goals are stricter, and North American exporters are having second thoughts on signing long-term export deals.

In this regard, Engie recently stopped talks with NextDecade for a supply deal, with nexus with the Rio Grande LNG terminal. NextDecade foreseeing trouble, delayed its investment decision until 2021. Because of this, many developers are integrating renewable energy onto their assets to ensure the competitivity of their goals in other markets.

“Sempra recently said it would package 4 GW of renewable assets into a new unit with its existing LNG portfolio and sell a non-controlling stake in the unit,” S&P report says.

Nevertheless, the growing demand in China and India, despite of the pandemic hit, will ensure the LNG business for years to come. In fact, S&P’s expectations are that imports of LNG by China will increase by 18% year-on-year from November to March.

All of these factors, on top of 17 new export trains currently under development all across North America, North American LNG export capacity would increase to 16,5 Bcf/d, which is equal to a 80% increase from current levels. Those trains along the U.S Gulf Coast, Mexico and Western Canada will be operational by the middle of the next decade, according S&P’s estimations

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