The Latin American LNG market is developing, but dramatic turns in consumption are unlikely in a region where infrastructure is difficult to develop.

While Asia and Europe develop massive regasification facilities and pipeline networks to deliver energy, Latin America is seeing growth in LNG trucks. Not tankers, but trucks that can deliver LNG over rough terrain to dispersed population centers, an analyst said.

“Small-scale LNG is the new big in Latin America,” said Sergio Chapa, senior energy analyst for the Americas at Poten and Partners, during in a May 21 webinar.

While LNG imports are expected to grow voraciously in Europe as the gas market shifts away from Russia to support growing economies in Asia, Latin America is a more complicated situation for natural gas, Chapa said.

For one thing, the region’s geography varies widely with mountains, deserts and jungles, with a scattered population of about 665 million people. The rough terrain has encouraged the development of hydropower, and many countries are developing their LNG regasification infrastructure as a backup.

The region also has a wide range of energy usage per capita. Residents of Panama use an average of 87.2 MMBtu of energy each year. Nearby Nicaraguans use an average of 12.9 MMBtu annually. The varying levels of demand over relatively small regions makes the dispersal of natural gas more complicated.

Small-scale delivery of LNG through trucks, ISO containers or small vessels, “makes a lot of sense in a lot of places,” Chapa said. While the market isn’t large, is does provide LNG producers with good prices.

“You can demand a premium on natural gas,” he said. Gas sold at a Henry Hub prices of $3.50/MMBtu in the U.S. can fetch between $10/MMBtu to $14/MMBtu in Latin America. The problem for producers is that the region offers very few long-term, large-scale contracts for LNG producers, slowing down the development for a fuel that will be dependably bought in other markets.

On the other hand, the region is expected to play a more meaningful role as more LNG production projects come online over the next decade, Chapa said.

Today, the region has a liquefaction capacity of 20.7 million tonnes per year (mtpa) and a total regasification capacity of 90.4 mtpa. Chapa said Poten and Partners expects the liquefaction capacity of the region to steadily grow for the next decade, passing 45 mtpa by 2035.

Trinidad and Tobago leadd the region with 15 mtpa of production, followed by Peru and Mexico. Projects under construction in Mexico and Argentina could boost production by another 5.8 mtpa by 2026.

Argentina is the planned destination for several floating LNG (FLNG) platforms. During its earnings meeting on May 27, Golar LNG executives said its current FLNG MKII project would most likely serve developing fields in Argentina.

Mexico has a large number of proposed LNG liquefaction projects that, if built, would boost the country’s production by 44.2 mtpa by 2035; however, Chapa said it was unlikely all of the Mexican projects would go forward. The country’s domestic economy is developing along with the U.S., meaning more power generation is needed for data centers and other sectors that require more electricity.

“There’s a competition for natural gas molecules in Mexico right now,” Chapa said. “If you're using the same pipeline to feed a power plant that's less LNG that you can export.”

It’s an overall trend for the region. Latin American countries will continue to produce larger amounts of natural gas, but the region’s economic growth may keep much of the resource at home, Chapa said.

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