COVID-19 mitigation efforts keep liquefied natural gas demand low
A new report from the United States Energy Information Administration (EIA) brought mixed news for the natural gas sector, noting that liquefied natural gas exports for the United States remain low due to the COVID-19 pandemic, but with the hope that normality should return in November.
In January 2020, before COVID-19 went into full swing across the world, U.S. exports of LNG hit a record high of 8 billion cubic feet per day (bcf/d). By July, they were down to 3.1 billion bcf/d, and at one point — the week of July 12-18 — only 2 bcf/d were loaded. About 50 cargoes were canceled in July, exceeding the reported number of expected cancelations, according to the EIA.
This, the agency warns, should continue for months yet to come, as it has been reported that buyers have already canceled 45 cargoes for August shipments and another 30 for September. This is due to a mix of supply highs among European and Asian gas stocks and ongoing expansion of global LNG liquefaction capacity.
This, in turn, has led to international natural gas and LNG prices tumbling to record lows. Since U.S. LNG exports are traded in the global spot market, the low prices have made exports from the United States less than economically viable.
Worldwide demand has also tanked in response to COVID-19 mitigation efforts.
This has left U.S. terminals operating at far less than optimal capacity. Whereas since the summer of 2018, U.S. LNG export capacity has averaged more than 90 percent, the EIA expects utilization will average 35 percent this summer. In July, the LNG terminals at Sabine Pass in Louisiana and Corpus Christi and Freeport in Texas reached just 33 percent, 28 percent, and 6 percent, respectively.
