NEW YORK: North American liquefied natural gas developers and producers this year have struck deals to sell 48 million tons of LNG, which will eventually pump up exports 60 percent from current levels, although much of the output remains years away.
LNG demand is soaring as the conflict in Ukraine pushes global prices to their highest in at least 14 years. Buyers in Europe have looked West in a move away from Russian gas, and Chinese buyers are striking long-term deals after a pause.
New gas-export plants are being developed across the US, and Mexico and Canada are poised to join as significant gas exporters, with plants proposed for their west coasts.
Eight North American LNG export terminals are under construction and over a dozen more could receive financial approvals by 2023. Some buyers have locked in supplies from plants that have not yet been approved for construction, so not every supply agreement may go ahead.
“The dynamics have shifted,” said Charlie Riedl, executive director for trade group Center for Liquefied Natural Gas. “Buyers are trying to lock up firm agreements where they can (to) guarantee that gas is going to be delivered,” he said.
This week, European gas prices hit $84 per million British thermal units and US gas futures on Tuesday topped $10 per mmBtu for the first time since 2008.
Goldman Sachs forecasts global LNG demand to rise about 12 percent 424 MTPA next year and expects new plants that will supply 156 MTPA to be approved within the next five years.
Growing demand has made the US this year’s largest LNG exporting nation during the first six months. Approved projects that are expected to begin shipments between 2023-2026 could keep the country in first place.
Some of the biggest deals are from Chinese firms returning to the US market after a pause over tariff disputes. Late last year, Venture Global LNG struck deals for 11 MTPA with units of China’s Sinopec and CNOOC Ltd. China’s ENN Natural Gas Co. signed separate deals last year with Cheniere Energy and Energy Transfer.