Surging demand in Latin America swept the region into the top spot as a destination for U.S. LNG exports during the second quarter.
Like Europe, Latin America has proven a critical outlet this year for U.S. LNG. Global oversupply has depressed spot prices and discouraged exports to the world's biggest demand markets in Asia.
Despite the rise of shipments to Latin America in the second quarter, European Union countries and Turkey remained the top regional destination for U.S. LNG over the first six months of 2019. According to an analysis of monthly export figures through June from the U.S. Department of Energy, Europe was the top destination for U.S. LNG in the first quarter of 2019, the first time this happened since Cheniere Energy Inc.'s first shipment from the U.S. mainland at Sabine Pass LNG in February 2016.
The DOE export data showed that overall U.S. LNG exports in the first half of 2019 went to a diverse group of countries. Regional shipments to Europe, Latin America and Asia were roughly split. The EU and Turkey accounted for more than 35% of all U.S. LNG export volumes during the first half, just a bit more than the combined pull of East Asian and South Asian countries. Latin America was the destination for more than 25% of exports.

In June, six U.S. LNG cargoes, the equivalent of about 19 Bcf of natural gas, departed for Chile as winter arrived in the Southern Hemisphere. Five came from Sabine Pass, while the sixth came from the Sempra Energy-led Cameron LNG terminal in Louisiana, which was cleared to enter commercial service in late July. The June shipments caused Chile to overtake India as the fifth greatest overall importer of U.S. LNG.
Mexico, which is the second-largest overall importer behind South Korea, was the destination for 17 Bcf of LNG in June. Another 12.2 Bcf worth of U.S. LNG exports went to Argentina, and 10.1 Bcf went to Brazil.
The top destination among all countries in June was still located in Asia, but it was South Korea instead of China, which is the primary driver of world gas demand growth. Six U.S. LNG cargoes with a total of 20.4 Bcf went to South Korea. Another four departed for Japan with a total of about 14.6 Bcf.
China, Japan and South Korea are the three largest global LNG markets, but their total imports started to decline in February for a variety of reasons, including a relatively mild winter. China's imports of U.S. LNG have plummeted with the ongoing trade war between Beijing and Washington. Zero U.S. cargoes departed for China in June. Japan's LNG demand is waning, due in part to the slow return of nuclear reactors to full operation after the 2011 Fukushima nuclear plant accident. South Korean demand has fallen because of surplus gas storage and greater use of nuclear power.
But a common thread in all three cases is that low global LNG prices remained a significant deterrent to companies that might want to move U.S. LNG spot cargoes to those countries.

Bernstein & Co. LLC analysts in a July report predicted that spot LNG prices would remain low through 2019 and into 2020 before the market turns around. Then Asian demand growth should push prices higher in a development that will pull more cargoes back to the region, boosting spot LNG prices and European gas prices, Bernstein said.
In the meantime, some industry observers have questioned whether sustained low prices could cause LNG producers to curtail or shut-in LNG production and ship fewer exports sold on a spot basis. On Aug. 8, Cheniere executives pointed to softness in short-term LNG spot pricing as a factor that weighed on the company's second quarter financial results.
"We're starting to see light at the end of the short-term market tunnel with some attractive winter spreads in the market, though our results and our outlook for the rest of the year have been impacted by the lower pricing environment," Cheniere President and CEO Jack Fusco said.
