TOKYO—U.S. exports of LNG to China, Japan and South Korea, the biggest importers of the fuel, have surged to record highs in recent months as the heavily industrialized region recovers from the COVID-19 pandemic, Eikon trade data shows.
As with the ramp-up of U.S. oil exports that forced heavyweights like Saudi Arabia to find other buyers, what was dubbed Freedom Gas by the administration of President Donald Trump is also changing global energy flows and quietly gaining a stranglehold on key markets in Asia.
Such is the speed of growth of imports into Japan, the U.S. is running neck and neck this year with Qatar—a long-term key exporter to Japanese utilities—as a major supplier to the world’s third-largest economy, official data showed this week. That comes despite U.S. LNG being nearly 40% more expensive than Qatar gas on a per heating unit basis.
And more gas is on the way. Natural gas flows to export terminals in the U.S. where gas is chilled to -160 C (-260 F) before shipment overseas totaled 11.8 billion cubic feet (334 million cubic metres) on March 31, according to one source.
That’s a daily record and up from the daily average of 10.8 billion cubic feet (Bcf) recorded in March.
LNG shipments from the U.S. to Japan, China and South Korea totaled 3.2 million tonnes in February, almost two-and-a-half times the highest monthly levels before the recent surge.
“The U.S. has got more export trains running so it is exporting more and demand has been relatively strong in northeast Asia,” said one long-time gas industry participant.
Record cold temperatures and snow this winter pushed demand for heating through the roof and sent frenzied buyers into the spot market to seek cargoes.
While March shipments of U.S. LNG into Asia have tailed off due to warmer weather they are still well above typical levels for the month, according to the Eikon data.
The export bonanza being experienced by the U.S. caps the completion of the first generation of export terminals that the shale gas revolution allowed.
But the next round of projects being developed will face tough competition from Qatar, which has announced plans for a massive expansion of export capacity and is enticing buyers with sweet deals.
A recent 2 million tonne annual supply deal with China’s Sinopec was priced at 10.19% of prevailing Brent crude prices, one of the lowest levels on record, according to the industry participant.
“I think American projects are now going to have to review their costs. The new projects will not be able to compete with the Qataris,” he said.
Recommended Reading
Tech Trends: Safety, Speed, Savings: Automation is Transforming Drilling
2024-03-26 - Drilling is getting smarter through automation, delivering efficiency, consistency and reliability.
AI Advancing Underwater, Reducing Human Risk
2024-03-25 - Experts at CERAWeek by S&P Global detail the changes AI has made in the subsea robotics space while reducing the amount of human effort and safety hazards offshore.
CERAWeek: Large Language Models Fuel Industry-wide Productivity
2024-03-21 - AI experts promote the generative advantage of using AI to handle busywork while people focus on innovations.
Geothermal ‘Could Save the World,’ but Faces Familiar Subsurface Risks
2024-03-20 - CERAWeek panelists discussed hurdles to widespread use of Earth’s heat to generate power — problems familiar to oil and gas operators.
CERAWeek: AI, Energy Industry Meet at Scary but Exciting Crossroads
2024-03-19 - From optimizing assets to enabling interoperability, digital technology works best through collaboration.