UK was top destination for US LNG in November amid Canal delays: cFlow

Houston — The United Kingdom was the top destination for US LNG during November, amid market contango and Panama Canal constraints, S&P Global Platts trade-flow data shows.

With US feedgas demand topping 11 Bcf/d for the first time Dec. 1 as all six major liquefaction facilities appeared to be producing at or near capacity, export activity is expected to continue to be robust through the end of the year.

Strengthening netbacks on deliveries to Asia, and multiple cargoes bound for there that remained on the water at the end of November, suggest that the region will be a key destination for US LNG supplies in December.

Ten US cargoes were delivered to the UK in November, followed by Brazil with nine. Seven cargoes each were delivered to India, China and Japan, tying them for third among countries that received US LNG last month, according to cFlow, Platts trade-flow software.

Strong contango in the European gas markets during the early fall incentivized some US LNG cargoes to delay deliveries into the higher-priced November contract, raising imports to the region last month. Another factor: wait times of up to more than a week for LNG tankers passing through the Panama Canal without a reservation.

The Canal Authority raised daily transits to ease the backlog, though as December began constraints remained. Some tankers that headed east from the US to reach Asia remain on the water and will eventually deliver, boosting the number of cargoes received there in December.

Amid a further ramp-up at the biggest US LNG export terminal -- Cheniere Energy's Sabine Pass in Louisiana – total feedgas demand reached 11.3 Bcf/d on Dec. 1, a new record, Platts Analytics data show.

Five of the six major terminals appeared to be operating at capacity, while there was still a small amount of unused capacity at Kinder Morgan's Elba Liquefaction in Georgia due to one of the 10 trains remaining offline since a May fire. Further US capacity will be available once construction of a sixth train at Sabine Pass is complete in 2022. In addition, two new liquefaction facilities are under construction – Venture Global LNG's Calcasieu Pass in Louisiana and ExxonMobil's and Qatar Petroleum's Golden Pass in Texas. Calcasieu Pass is targeted to start up in 2022 and Golden Pass in 2024.

US supplies will continue to point toward Asia in the weeks ahead even amid reasonable netbacks to Europe . The Platts JKM, the benchmark for spot LNG prices in Northeast Asia, has seen a more than fourfold increase from its historic low on April 28 at $1.825/MMBtu. That has pulled the US Gulf Coast LNG netback to the region up to a year-to-date high of $2.59/MMBtu.

According to Platts prices Nov. 30, the JKM for January stood at a premium of $2.303/MMBtu over the MED, with the freight difference from the US to the two markets being $1.233/MMBtu.