LNG tanker sailing the water of the North Sea. (Source: Shutterstock.com)
Europe remains keen on U.S. LNG exports, a trend that has been constant throughout 2022.
The start of Russia’s war in Ukraine earlier this year prompted sanctions from western allies and resulted in reduced supply flows from the invading country.
A massive supply gap has emerged in European gas markets due to the disruption to Russian pipeline flows, Wood Mackenzie announced Dec. 8 in its new report ‘The Silver Linings Playbook.’ With Russian gas exports to the European Union down almost 82%, the continent has had to scramble to find new supply to fill the gap – and U.S. LNG has been the answer.
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“We now expect two-thirds of all U.S. LNG cargoes to land in Europe this year,” said Wood Mackenzie Vice President, Gas & LNG Research Kristy Kramer in a company statement referring to findings in the new report. “Regasification capacity is currently the major impediment to even more U.S. LNG exports to Europe.”
The wealth of low-cost gas reserves, the relatively short time to market for new volumes and its competitive commercial structure continue to make U.S. LNG attractive, she added.
Top four European destinations
U.S. LNG exports of 9.8 Bcf/d in September 2022 went to four primary markets: France, the U.K., the Netherlands and Spain, according to recent data in the U.S. Department of Energy’s ‘LNG Monthly’ report.
These four countries were the final destination for 5.4 Bcf/d, or 54.7% of total U.S. LNG exports in September 2022 compared to 4.2 Bcf/d, or 43.9% of total U.S. LNG exports of 9.7 Bcf/d in August 2022.
Total U.S. LNG exports in September 2021 were 9.5 Bcf/d, according to the report, which didn’t provide country-specific details for September the year prior.
Earlier this year, U.S. LNG exports peaked at 11.7 Bcf/d in March 2022 prior to an incident at the three-train Freeport LNG liquefaction plant on Quintana Island, Texas.
The incident resulted in the release of LNG and a subsequent fire at the plant that halted all production. The plant is expected to achieve production of approximately 2 Bcf/d in January 2023 and full production in March 2023 with use of both of its docks, Freeport LNG said Nov. 18 in a press release.
Looking forward, the U.S. Energy Information Administration expects average U.S. LNG exports to reach 12.3 Bcf/d in 2023 compared to 10.6 Bcf/d in 2022, the agency announced Dec. 6 in a statement on its website. This compares to exports of 9.8 Bcf/d in 2021 and 6.5 Bcf/d in 2020.
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