LNG demand in Latin America continues to pull one-off cargoes from the market
Demand for liquefied natural gas (LNG) in Latin America had a record year in 2021 and is not slowing down, squeezing a global gas market that has pushed up prices around the world.
LNG imports into Latin America for the first eight months of the year amounted to 10.44 million tonnes, according to market research firm Kpler. Imports were 120% higher than in the comparable period last year and 36% higher than in January-August 2019.
Latin America’s LNG imports so far in September, at 1.02 million tonnes, are already double the whole of September 2020, according to Kpler.
Brazil, which relies heavily on hydropower for its electricity, faces a record drought and relies on LNG to keep the lights on. To date in September, Brazilian imports of LNG totaled 654,000 tonnes, compared to zero cargo in September 2020.
“The country continues to fight the effects of drought on hydropower generation,” Kpler analyst Laura Page told NGI. She added that the country could see some relief in the coming weeks as the peak rainy season sets in. Brazil is still expected to continue importing higher levels of LNG until next year, which could also be helped by new import terminals under construction. noted.
Argentina and Chile’s LNG imports have also been robust, especially during the colder months of May through September, according to data from Kpler.
“LNG imports into Latin America continue to reach high levels,” Kpler’s analyst Charles Costerousse told NGI. He said the region experienced “record demand” during the summer months in North America, “led by very strong buying behavior from Brazil and in particular Argentina.”
Argentina implemented a second LNG import option in May following lower than expected domestic gas production and growing demand.
Latin American LNG imports have remained high so far in September, with the million-tonne mark already eclipsed for the fifth consecutive month. Kpler predicts that in September, LNG imports to Latin America are expected to total around 1.5 to 1.6 million tonnes.
“This continues to push some of the much-needed ex-US cargo away from Europe, as 89% of September’s volumes in Latin America came from the United States,” Costerousse said. Qatar and Equatorial Guinea provided the remainder, at 6% and 5% respectively.
The demand image in Latin America arises in a context of limited natural gas supply in Europe. Rapid natural gas prices in northwestern Europe recently approached $ 26 / MMBtu. However, the unusually high prices of the Japan-Korea marker (JKM) are also attracting spot LNG shipments to Asia.
In light of the crisis, the International Energy Agency issued a statement on Tuesday urging Russia to send more supplies to Europe and inject more gas into storage for the coming winter to deal with the crisis. The global energy watchdog has said drought in Latin America is part of the global puzzle leading to short storage stocks.
Mexico to cash?
Mexico now relies primarily on gas pipeline imports from the United States to meet demand, but the interest of Asian buyers in the price and demand frenzy is prompting renewed interest in a trio of export projects. mexicans.
The CEO of Mexico Pacific Ltd. LLC (MPL), Doug Shanda, told NGI’s Mexico GPI earlier this month that 22 million metric tons / year (mmty) of mandatory off-take capacity is being negotiated for the company’s LNG project. in Puerto Libertad, including 14 mmty for which memorandums of understanding have been signed.
Meanwhile, Mexico’s CFEnergía said in August that it was seeking formal expressions of interest from private sector companies to build and operate a gas pipeline and floating LNG terminal targeting the Asian market. And San Diego-based Sempra is also advancing plans to expand Energia Costa Azul’s export project to Mexico, CEO Jeffrey Martin said in a recent earnings call.