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mmBtu ($174.26 per 1,000 cubic metres). Rystad of the LNG market compared to other fuels, and
noted, however, that Asian spot LNG prices are also illustrates why LNG proved to be so robust
around $12 per mmBtu ($331.92 per 1,000 cubic during 2020 when COVID-19 hit the market
metres), allowing even for the costs of Egyptian with full force,” he added.
LNG to be absorbed.
What next?
Still profitable US LNG exports rose to a record monthly high
The SRMC is not the only cost factor to be influ- of 6.5mn tonnes in May and Rystad said they
encing the LNG market, though. Rystad also may keep climbing to new peaks. The EIA’s pro-
highlighted pre-tax liquids revenue, which it jections show some fluctuations, meanwhile,
said is calculated as the pre-tax revenue from oil with the agency forecasting that US LNG exports
activity for the upstream assets that feed LNG will increase to a new high of 9.83bn cubic feet
plants, divided by LNG production. (278.4mn cubic metres) per day in the second
Thanks to higher oil prices in recent months, quarter of this year, but will then dip, not exceed-
and taking into account pre-tax liquids reve- ing that level until the first quarter of 2022.
nue, many integrated LNG projects have seen The EIA also anticipates that over the whole
improved competitiveness so far this year, the of 2022, LNG export volumes will be lower than
consultancy said. Thus the variable cost of LNG in 2021, at 9.22 bcf (261.1 mcm) per day, down
can be offset by oil production revenues, and from a projected 9.38 bcf (265.6 mcm) per day
Rystad said that as a result, some projects glob- this year. If this proves to be correct, it would be
ally can even be profitable even if LNG prices fall the first annual decline in US LNG export vol-
to zero. It cited Qatar’s Qatargas 1 LNG Train 1 umes since 2013, when the country only had one
as an example. export terminal, in Alaska, which has since been
That said, the consultancy does not expect shuttered while new liquefaction terminals came
prices to fall to zero, or even to a level in line with online in the Lower 48 states.
the SRMC of Egyptian LNG. Both European Reuters reported earlier this month that it
and Asian LNG demand are projected to remain had not seen any other analyst project that US
robust, bolstered by restocking, high carbon LNG exports would decline in 2022. The predic-
dioxide (CO2) prices and lower-than-expected tion becomes even more perplexing given that
Russian pipeline gas exports to Europe, as well as more liquefaction capacity is due to enter service
the ongoing post-pandemic recovery. in the US over the coming months, at Cheniere
“Of the 393mn tonnes of LNG that we expect Energy’s Sabine Pass terminal, as well as Venture
to be produced in 2021, over 300mn tonnes, Global LNG’s new Calcasieu Pass plant.
or 75%, can be supplied at a cost below $3 per The EIA has not given a reason for its pro-
mmBtu [$82.98 per 1,000 cubic metres], includ- jected LNG export decline, and has also forecast
ing delivery to Asia. Furthermore, 225mn tonnes that dry gas production will rise to a new record
can be delivered to the market at a price below high in 2022. It is possible that the agency will
$2 per mmBtu [$55.32 per 1,000 cubic metres],” revise its forecast in upcoming outlooks. For
commented Rystad’s vice-president of gas mar- now, there does not appear to be any obvious
kets, Sindre Knutsson. “This shows the diversity reason for US LNG exports to dip next year.™

Week 26 01•July•2021 www. NEWSBASE .com P5