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US LNG shipments to Latin America grew in August

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Essential Energy Insights - November 2021


US LNG shipments to Latin America grew in August

Liquefied natural gas shipments from the U.S. to Latin America surged in August along with cargoes headed for markets in Asia, according to figures released by the U.S. Department of Energy.

Mexico, the top overall importer of U.S. LNG, imported 20.7 Bcf in August. That was the most U.S. LNG imported by any country in August. In July, Mexico imported 21.2 Bcf of LNG from the U.S.

Cargoes to smaller markets spiked in August. Brazil imported 15.4 Bcf, pushing the country above Argentina as the eighth overall greatest importer of U.S. LNG since Cheniere Energy Inc.'s Sabine Pass in 2016 became the first terminal in the Lower 48 to ship LNG. Cargoes to Argentina were robust in August at about 10.7 Bcf. Colombia imported 0.9 Bcf.

Notable August LNG shipments to Latin America also included the Dominican Republic, which received 3 Bcf. The Dominican Republic's recent cargo brought the country above Pakistan, the United Arab Emirates and Egypt to become the 15th-greatest importer of U.S. LNG since the shipments started.

In the Middle East, Kuwait imported 3.5 Bcf in August, rising above Spain in terms of total imports. Jordan brought in 3.6 Bcf during the month.

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The shipments to Latin America and the Middle East continued a trend in recent months attributed more to seasonal demand around the world than to trade tension between the U.S. and China, which is seen as the world's hottest market for the American commodity.

China put a 10% tariff on U.S. LNG on Sept. 24. In August, China received 3.6 Bcf of U.S. LNG, a decrease from the total 10.6 Bcf of imports from July. Other markets in Asia imported significant amounts of U.S. LNG. South Korea received 17.5 Bcf, and Japan took in 10.2 Bcf.

Cheniere President, CEO and Director Jack Fusco, in Oct. 11 comments at an energy conference at Rice University in Houston, pushed back on the notion that the tariffs are a threat to U.S. LNG deliveries to China. The initial shipments after Sabine Pass first came online targeted Latin America, a destination Fusco said made sense from a logistics perspective when sending cargoes from the Gulf Coast. But starting in the fourth quarter of 2017, shipments to China boomed because of an unusually cold winter and a longer-term initiative to reduce air pollution.

"The Chinese, they are going to lift all day, our clients at [China National Petroleum Corp.]," Fusco said. "They signed up for 25 years. They have an all-in cost that's less than $8 MMBtu. [The Japan Korea Marker benchmark] is trading at $12. They are making a $4 spread. Throw on $0.10 on $7 ... 70 cents to the government. So it comes out of one pocket, goes in the other pocket, but they are still making over $3 of margin. They are going to lift all day."