LNG demand in Latin America is booming in a tight global natural gas market

Demand for liquefied natural gas (LNG) in Latin America had a record year in 2021 and is not slowing down, squeezing a global gas market that has pushed up prices around the world.

LNG imports into Latin America for the first eight months of the year amounted to 10.44 million tonnes, according to market research firm Kpler. Imports were 120% higher than in the comparable period last year and 36% higher than in January-August 2019.

LNG imports to Latin America so far in September, at 1.02 million tonnes, are already double that of all of September 2020, according to Kpler.

Brazil, which relies heavily on hydropower for its electricity, faces a record drought and relies on LNG to keep the lights on. To date in September, Brazilian imports of LNG totaled 654,000 tonnes, compared to zero cargo in September 2020.

Argentina and Chile’s LNG imports were also robust, especially during the colder months of May through September, according to data from Kpler.

“LNG imports into Latin America continue to reach high levels,” Kpler’s analyst Charles Costerousse told NGI. He said the region experienced “record demand” during the summer months in North America, “led by very strong buying behavior from Brazil and in particular Argentina.”

Argentina implemented a second LNG import option in May following lower than expected domestic gas production and growing demand.

Latin American LNG imports have continued to be high so far in September, with the million-tonne mark already eclipsed for the fifth consecutive month. Kpler predicts that in September, LNG imports to Latin America are expected to total around 1.5 to 1.6 million tonnes.

“This continues to push some of the much-needed ex-US cargo away from Europe, as 89% of September’s volumes in Latin America came from the United States,” Costerousse said. Qatar and Equatorial Guinea provided the remainder, at 6% and 5% respectively.

European headaches

The demand image in Latin America arises in a context of limited natural gas supply in Europe. On Monday, natural gas prices for October in northwestern Europe hit nearly $ 26 / MMBtu. However, the unusually high prices of the Japan-Korea marker (JKM) are also attracting spot LNG shipments to Asia.

In light of the crisis, the International Energy Agency issued a statement on Tuesday urging Russia to send more supplies to Europe and inject more gas into storage for the coming winter to deal with the crisis. The global energy watchdog has said drought in Latin America is part of the global puzzle leading to short storage stocks.

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Mexico to cash?

Mexico now relies primarily on gas pipeline imports from the United States to meet demand, but the interest of Asian buyers in the price and demand frenzy is prompting renewed interest in a trio of export projects. mexicans.

The CEO of Mexico Pacific Ltd. LLC (MPL), Doug Shanda, said Mexico GPI of NGI earlier this month, 22 million metric tonnes / yr (mmty) of mandatory off-take capacity is being negotiated for the company’s LNG project in Puerto Libertad, including 14 mmty for which memoranda of understanding have been signed. been signed.

Meanwhile, Mexico’s CFEnergía said in August that it was seeking formal expressions of interest from private sector companies to build and operate a gas pipeline and floating LNG terminal targeting the Asian market. And San Diego-based Sempra is also advancing plans to expand Energia Costa Azul’s export project to Mexico, CEO Jeffrey Martin said in a recent earnings call.

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