(Corrects to say imports from Canada are natural gas, not liquefied natural gas, in sixth paragraph.)

May 12 (Bloomberg) -- U.S. imports of liquefied natural gas may rise 43 percent this year as production plants begin operations overseas and demand from Europe and Asia declines, the Energy Department said today in a report.

The flow of LNG into the U.S. will be about 500 billion cubic feet compared with 350 billion cubic feet in 2008, according to the monthly report. The new estimate is a 4.2 percent increase over last month’s projection. Next year’s imports may rise to 650 billion cubic feet, the department said.

“Expected weak natural-gas demand in the liquefied natural gas-consuming countries of Asia and Europe, the startup of new liquefaction capacity, and limited natural-gas storage capacity in countries that typically rely on LNG are expected to increase the availability of LNG for the U.S.,” the department said.

Shipments to the U.S. are increasing. Imports this month are double those of a year ago, at 1.6 billion cubic feet per day, David Pursell, managing director at Tudor Pickering Holt & Co. LLC in Houston, said in a note yesterday.

Global liquefaction production may grow by 16 percent this year, aided by new plants in Qatar and Russia, and by 26 percent by the end of 2010, Louis Capital Markets LP said in an April 16 report. Since 2004, capacity at U.S. terminals has more than tripled to 10.5 billion feet, and 8.9 billion cubic feet a day is under construction.

Gas imports from Canada may fall 7 percent this year because of declining productivity of gas wells and suspended drilling programs there, according to the report.

LNG is gas that is cooled to a liquid for transport by ship to markets not connected by pipelines. The fuel is received at import terminals and converted back to a gaseous form so it can be piped to users.

To contact the reporter on this story: Todd Zeranski in New York at tzeranski@bloomberg.net

Last Updated: May 12, 2009 17:07 EDT