Page 4 - GLNG Week 25 2021

GLNG COMMENTARY GLNG

Costs of supplying

US LNG to Asia rise

A new report has found that the cost of

supplying US LNG to Asia rose this year, but US

production of the fuel is still anticipated to hit

record highs

PERFORMANCE THE cost of supplying US LNG to Asia has with the summer of 2020, when depressed
risen this year, a new report by consultancy Rys- demand amid the pandemic led to numerous
WHAT: tad Energy has found. This has been attributed cancellations of US cargoes. While US LNG
The cost of supplying US primarily to a jump in transportation costs for was already seen to be rebounding by the end of
LNG to Asia has risen this LNG, driven by higher charter rates and fuel 2020, the cancellations resulted in liquefaction
year, according to a new prices, and has also affected other producers of plants on the Gulf Coast shutting in output. Rys-
report by Rystad Energy. the super-chilled fuel. However, the consultancy tad has estimated that about 12mn tonnes of US
went on to say that despite the rise in costs, US LNG exports were shut in last year, but added
WHY: LNG production would hit a new record high of that it does not see any signs of shut-ins in 2021.
This is primarily 72mn tonnes in 2021.
attributed to a jump in The findings come as both US production of Short-run marginal cost
transportation costs for LNG and Asian demand continue to grow, and The short-run marginal cost (SRMC) of US LNG
LNG, driven by higher the world opens up in the wake of the worst of exports is the main focus of Rystad’s new report,
charter rates and fuel the coronavirus (COVID-19) pandemic. Rys- which was unveiled this week. The consultancy
prices. tad is not the only one forecasting that US LNG found that the SRMC of US LNG exports to
production will reach record highs this year. The the Asian market had risen to about $5.60 per
WHAT NEXT: US Energy Information Administration (EIA) million British thermal units ($154.90 per 1,000
US LNG production is still projects in its latest Short-Term Energy Out- cubic metres) as of June 2021. This marks a
forecast to reach record look that LNG exports will hit a new record in 65% increase from $3.40 per mmBtu ($94.04
highs in 2021. 2021 – with the trend therefore also extending per 1,000 cubic metres) in mid-2020 and a
to production. 30% increase on last year’s average of $4.30 per
If these expectations play out, it will mark a mmBtu ($118.94 per 1,000 cubic metres).
turnaround for the US LNG industry compared As well as being affected by rising

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