US becomes the world’s largest exporter of liquified natural gas
In just five years, the US has become the world’s largest exporter of liquified natural gas... how did the industry grow so rapidly?
The United States has become the world’s largest exporter of liquified natural gas (LNG), with exports increasing over three hundred percent over the last five years. The US Energy Information Adminstration (EIA) reported the news early this week, citing data from data from CEDIGAZ, an organization dedicated to data analysis on the production and trade of natural gas internationally. Australia clocked in as the second-largest global exporter and is also expected to become an importer of LNG by the end of 2024. Exactly how importing a product readily available in the country will be cost-effective is a reminder that the environmental toll of these energy resource trade remains disconnected from the price of these commodities.
In the US, the rise in exports aligns with the general trend of increased natural gas production that has taken place in the US over the last decade. Much of the boom can be attributed to fracking. Over the last ten years, production, as measured by million cubic feet per day, has risen from 79,000 mcf/day to 124,000 mcf/day, a fifty-six percent increase. All that gas has to go somewhere...
US LNG exports to Europe surge
Increased European demand has fueled US dominance in the international LNG market. As Russia’s escalation in the war in Ukraine led to sanctions on Russian energy resources, many European countries were forced to look elsewhere for natural gas.
In the first six months of 2018, the US exported 491,750 million cubic feet (mcf) of LNG. When looking at exports over the same period this year, that figure has ballooned to 2,100,800 mcf. The Netherlands (+9232 percent), the United Kingdom (+4901 percent), and Portugal (+1038 percent) have seen imports of US LNG increase by the most significant margin when comparing the 2023 numbers to those recorded in 2018. In terms of volumes imported, the first two countries listed are also the largest importers, after Canada and Mexico, followed by France, Spain, and Japan. Of the ten largest importers in 2023 so far, four were not buyers of US LNG in the first half of 2018.
Largest importers of US LNG 2018 to 2023 (Volume, mcf)
|Country||Jan-June 2023||Jan-June 2018||Change (%)|
Italy and Spain began importing US LNG in 2016, but the quantities purchased were much smaller than those seen this year. France made its first purchase of US LNG in October 2018. Germany would not make its first order until November 2022. These five countries account for half of all US LNG exports this year.
European Imports of US LNG (2016-2023, mcf)
Analysts at the EIA noted that since early 2022, Europe’s capacity to accept LNG has increased rapidly, with new terminals becoming operational in Finland, Germany, Italy, and Spain this year. Additionally, thanks to a “mild winter,” much of the gas that has been imported is being stored.
Asia and Latin America see US LNG fall
However, as European demand rises, that of other regions has slowed in recent years.
China, which has been a buyer of US LNG since 2016, saw imports peak in 2021 and then decline sharply.
US LNG Imports: China 2015-2023 (mcf)
|Year||Volume (Change year-over-year)|
Flows to India show a similar trend to that of China, while those to South Korea and Japan have remained relatively constant.
While sanctions on Russian energy resources from allies of Ukraine aimed to damage the Russian economy, imports in other regions have helped to partially offset the full economic impact. According to Al Jazeera, China purchased 2.4 times more LNG from Russia in 2022, spending $6.75 billion on one resource alone; when accounting for the amount of petroleum and pipeline gas China consumed, the bill is estimated to be around $10 billion. India remains a small importer of Russian gas, but their demand for Russian oil did rise in 2022.
Exports of LNG to Latin America from the US have also begun to fall, but there is no evidence that these countries are turning to Russia for their imports. The region has not been a significant market for LNG from Russia in the past, with trade focused on other commodities, including fertilizer, aluminum, and food items, according to the UN economic research agency focused on Latin America, ECLAC.
Exports are expected to rise further this year and next
As markets continue to adjust to the sanctions regime imposed by the United States, the European Union, and other allies, the EIA expects the trade of LNG to continue to increase. “Import capacity is set to expand by 16%, or 23 billion cubic feet per day (Bcf/d), by the end of 2024 compared with 2022,” reported the agency in late August.
What remains unclear is how much the US market will benefit from the increased capacity as LNG terminals become operational. The EIA noted that Vietnam first imported LNG this year, but the US was not the exporter. In Southeast Asia, Russia, Australia, Malaysia, Qatar, and Indonesia may all be more attractive options based on proximity alone.
The environmental consequences of LNG expansion
After one of the warmest summers on record, the increased capacity of countries to import LNG is alarming to climate scientists. Based on the agreements reached at the Conference of the Parties in Glasgow in 2021, the world is “heading for 2.4°C of warming under current 2030 targets,” according to the Climate Action Tracker. The scientists warned that the “massive LNG expansion plans” would “seriously compromise meeting the 1.5°C limit.” Those plans are now becoming a reality, with the countries making the investments saying very little about the environmental consequences bringing these LNG terminals online will have.
For decades, the private sector has said that it was capable of embedding the cost of environmental damage into the price of fossil fuels, which, in theory, would create greater demand for renewables. However, the theory is flawed because fossil fuel companies do not bear the cost of ecological damage created by their products. People do. Communities across the globe are already forced to confront the violence of climate change, and their numbers are increasing. The rapid expansion of LNG terminals shows that governments around the world are comfortable using the global energy crisis to allow for what could be a permanent expansion of fossil fuel infrastructure.