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Move over Mexico, South Korea now tops list as biggest importer of LNG from Sabine Pass

Highlights

102 cargoes delivered to Asian country from Cheniere terminal: cFlow

Kogas looking into adding supply from several US liquefaction facilities

Houston — South Korea overtook Mexico last month as the biggest importer to date of LNG produced at Cheniere Energy's Sabine Pass terminal, even as netbacks from the US Gulf Coast to Europe strengthened compared with Asia, data compiled from S&P Global Platts Analytics' vessel-tracking tool cFlow showed.

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Since the first LNG cargo left the Louisiana facility in February 2016, Mexico had been the biggest buyer, given its heavy reliance on US supplies of the fuel to heat homes and run electricity generating plants. While it continues to bring in shipments, new infrastructure is being built in the country to move more exports from the US via pipeline, and Mexico is talking about adding LNG exports of its own.

Asia, meanwhile, is a key market for Cheniere and the other US LNG exporter currently operating -- Dominion Energy. As many as three more LNG export terminals are expected to start up this year along the Gulf and Atlantic coasts, with foundation shippers that will be taking more cargoes to Asia. In the interim, Europe is picking up a good number of spot cargoes from the US because of weak Asian prices.

To date as of Thursday, there were 102 cargoes that had been delivered to South Korea from Sabine Pass, followed by Mexico with 98. China was third, with 60 cargoes imported from Sabine Pass. The pecking order flipped December 8, with South Korea moving ahead of Mexico. There were 22 vessels carrying LNG produced at Sabine Pass that were on the water heading to global destinations on Thursday, cFlow showed.

South Korean imported roughly 5.6 Bcf/d of LNG in 2018, an 18% increase over 2017, making it the third largest LNG importer globally. The US supplied nearly 0.6 Bcf/d of those imports in 2018, up 107% compared with 2017. Kogas, which imports the vast majority of LNG in South Korea, took control of 3.8 million mt/year (~0.5 Bcf/d) of capacity from Sabine Pass Train 3 in mid-2017, suggesting that South Korean buyers are purchasing roughly 0.1 Bcf/d of US LNG in excess of their long-term capacity commitments. Besides its relationship with Cheniere, Kogas has been pursuing the possibility of buying LNG from second wave US export projects that are currently under development in Lake Charles, Louisiana, and Port Arthur, Texas.

EUROPEAN EDGE

Recently, Northwest Europe has offered the strongest netbacks to US LNG exporters, with the UK netback to Sabine Pass averaging roughly $3/MMBtu in January, 20 cents/MMBtu stronger than the comparable netback to Platts JKM, the benchmark price for spot LNG in Northeast Asia.

And while Dominion Cove Point netbacks have still pointed negative this month, Northwest Europe remains a far more attractive spot market, with comparative netbacks estimated at roughly 70 cents better than those from the JKM due to the favorable shipping distances.

Cheniere marketing officials have been aggressively pursuing new offtake deals to support the exporter's liquefaction facilities at Sabine Pass and near Corpus Christi, Texas. The company also plans to build midscale liquefaction units at Corpus Christi and a new gas pipeline to move more feedgas supplies from the Mid-Continent region to the Gulf Coast.

It is scheduled to release its latest financial results and its outlook for the rest of the year on February 26.

-- Harry Weber and Ross Wyeno, newsdesk@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com