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US led record year for world LNG additions in 2019, IHS Markit says

U.S. LNG projects in 2019 spearheaded a record-breaking year for global LNG capacity additions that saw 38.8 million tonnes per annum of new liquefaction startups, IHS Markit said in a Jan. 21 report.

The U.S., which ended the year with six major export terminals online, accounted for 15.2 mtpa of the worldwide capacity additions over the year. That brought the total U.S. capacity to about 37.7 mtpa, or roughly 10% of the global supply, IHS Markit said.

"The ongoing pace of new investment is especially noteworthy considering a market context of weak global prices," Michael Stoppard, IHS Markit's chief strategist of global gas, said in a news release. "Not only did LNG grow at an unprecedented rate in 2019, but the industry also laid the foundations for continued strong growth into the middle of the decade."

Worldwide, IHS Markit said 2019 was also a record year for new LNG projects getting commercially sanctioned, with about 70.4 mtpa of capacity advancing to construction. That was 40% higher than the previous record set in 2005. Globally, a series of projects were commercially sanctioned by deep-pocketed project sponsors without long-term off-take agreements. The only U.S. project to take that route so far has been Golden Pass LNG in Texas, which is backed by Exxon Mobil Corp. and Qatar Petroleum.

The pace of project starts is expected to slow in 2020 to 28.6 mtpa worldwide. But the U.S. is expected to continue to dominate as remaining liquefaction units at existing sites come online, IHS Markit said. A new train at the Freeport LNG Development LP facility in Texas and at the Sempra Energy-led Cameron LNG terminal in Louisiana will account for the bulk of the U.S. additions.

The rise in feedgas deliveries to the U.S. export facilities over the year was significant, with total daily natural gas flows at six terminals exceeding 8.5 Bcf on the final day of December 2019.

The ongoing build-out of the U.S. LNG export infrastructure is expected to help keep a lid on international gas prices in 2020 in an evolving marketplace, but rising supplies are also expected to test the market's ability to consume it. In 2019, loose market conditions spurred speculation about possible curtailments of existing U.S. LNG facilities, and analysts have said 2020 could see a similar dynamic.

It could also be a crucial year for a dozen or so U.S. LNG projects reaching the stage of final investment decision in a difficult commercial environment, with depressed global prices, oversupply concerns and the unresolved U.S.-China trade war. An initial agreement signed Jan. 15 by the two powers prompted some optimism in the U.S. industry, but significant uncertainty remains.

China is expected to become the world's largest LNG importer within a decade, making it a critical market. China overtook Japan as the world's largest LNG importer during December 2019, but IHS Markit said Japan is expected to remain the world's largest importer on an annual basis through 2022.

The U.S. is projected to become the largest LNG producer in 2023, IHS Markit said. But in 2019, it was Australia that surpassed Qatar to claim the spot as the top LNG exporter, reaching 80.2 mtpa, IHS Markit said.