By Fred Ojiegbe
World trade in LNG in 2020 has remained essentially unaltered from 2019, averaging 46.9 billion feet per day (bftpd) compared with 46.7 billion ft/d in 2019, according to the recently released The LNG Industry: GIIGNL Annual Report 2021 by the International Group of Liquefied Natural Gas Importers (GIIGNL).
This 0.4 per cent annual increase in LNG trade occurred despite the COVID-19 pandemic that reduced global natural gas demand.
The report noted that between 2015 and 2019, global LNG trade expanded by 45 per cent, posting record growth in both 2018 and 2019.
This expansion primarily resulted from liquefaction capacity additions in Australia, the US, and Russia, which combined, accounted for more than 90 per cent of the global growth in liquefaction capacity during this period.
According to the Energy Information Administration (EIA) in 2020, LNG exports increased from only two countries – the United States by 1.5 billion ft3pd and Australia by 0.3 billion ftpd, compared with 2019.
Last year, the US commissioned several new liquefaction units (called trains), namely the third and final trains at Cameron LNG, Freeport LNG, and Corpus Christi LNG export facilities, as well as the remaining trains at the Elba Island LNG export facility.
With the spread of the COVID-19 pandemic and lockdowns in many LNG-consuming countries, US LNG exports significantly declined in June and July of 2020, but they have gradually increased in the months that followed and set consecutive all-time highs in November and December 2020.
In 2020, Australia became the world’s largest LNG exporter, for the first time, overtaking Qatar, with exports averaging 10.2 billion ftpd, an increase of 0.3 billion ftpd (3 per cent) compared with 2019.
Exports from Qatar declined by 0.1 billion ftpd (1 per cent) compared with 2019.
Exports from all other countries have either remained flat or declined, amounting to a combined 1.6 billion ftpd decrease compared with 2019.
The report also stated that among all LNG-importing regions, only Asia had an increase in annual LNG imports, by 1.1 billion ftpd (3 per cent), in 2020 compared with 2019.
China and India drove the overall annual increase, as China’s LNG imports increased by 1.0 billion ftpd and India by 0.4 billion ftpd in 2020.
In China, continuous growth in LNG imports mainly resulted from government-supported coal-to-natural gas switching policies to reduce air pollution.
In India, all-time low spot LNG prices in the spring and summer of 2020 led to more fuel switching and an increase in LNG imports procured on a spot basis.
LNG imports to Japan continued to decline in 2020, averaging 9.8 billion ftpd, which was 0.3 billion ftpd less than in 2019.
Europe’s LNG imports declined by 5 per cent, averaging 10.7 billion ftpd in 2020, but remained significantly higher than the 6.1 billion ftpd in 2017 and 6.4 billion ftpd in 2018, the EIA states.
Incidentally, LNG contributions from African countries were not mentioned in the report.
… to Increase by 4% in 2021
Global liquefied natural gas (LNG) expanded by nearly 5 per cent year-on-year (y-o-y) in the first half of 2021.
The Asia Pacific region remained the primary engine of import growth, registering 12 per cent y-o-y expansion in the January to June 2021 period.
China saw the largest absolute expansion, with LNG inflows increasing by 28 per cent y-o-y in the first six months.
This was fuelled by cold winter weather, a strong economic recovery, subdued pipeline gas imports from Central Asia and a hot start to the summer in south China in May.
Japan and Korea sustained healthy LNG import growth, driven by a cold blast in January, the subsequent replenishment of LNG stocks and growth in gas-fired generation.
The majority of emerging Asian importers led by Pakistan and Bangladesh experienced a sharp increase in LNG arrivals thanks to rising gas demand in the power sector.
Meanwhile, India’s LNG imports dropped by 3 per cent y-o-y, as record-high spot prices in January and a devastating second wave of COVID-19 in April and May dampened LNG demand.
Central and South America registered strong gains, boosting LNG imports by more than 75 per cent y-o-y in the first six months of 2021.
Brazil accounted for the bulk of the growth, where LNG-fired power plants were dispatched to compensate for low hydro generation amid an unusually dry southern hemisphere winter.
European LNG imports dropped by nearly 20 per cent y-o-y in the first half of 2021 as Atlantic Basin cargoes were redirected to Asia.
The reduction in LNG intake was offset by increased storage withdrawals and pipeline gas imports into Europe.
The Middle East recorded a minor y-o-y increase, while North American imports dropped by almost 50 per cent y-o-y as US pipeline gas continued to displace LNG in Mexico.
North America has dominated LNG export growth so far this year, with US LNG output expanding by more than a third y-o-y in the first six months of 2021.
This remarkable growth comes despite a sharp 29 per cent month-on-month, m-o-m drop in February 2021 during the Texas electricity crisis, and is largely the result of a 50 per cent increase in US liquefaction capacity since the beginning of 2020. Africa’s LNG exports rose by 9 per cent y-o-y, driven by a sharp rebound in LNG exports from Egypt, which was further boosted by the reopening of the Damietta plant in February 2021.
LNG output in the Middle East rose by 2 per cent y-o-y as Qatar produced in excess of nameplate capacity in the first half of 2021.
LNG exports from Eurasia (i.e. Russia) were up by 5 per cent y-o-y.
Exports from the Asia Pacific region remained flat, while output in Europe and Central and South America saw steep declines due to the ongoing outage at the Hammerfest LNG terminal in Norway and reduced feed gas availability at the Atlantic LNG plant in Trinidad and Tobago, respectively.
In 2021, global LNG trade is expected to increase by 4 per cent, with import growth driven entirely by the Asia Pacific region and export growth fuelled mainly by North America.