Half of America’s Gas Exports Claimed by Asia in Next 3 Years

  • Most U.S. gas exports have gone to Latin America so far
  • Panama Canal expansion stands to benefit Asian buyers: BNEF

More than half of the liquefied natural gas leaving the U.S. over the next three years is contracted by Asian buyers, signaling a potential shift in a market that has been dominated by Latin America since shale exports began in February.

The U.S. is slated to bring online 42.9 million tons a year of LNG export capacity in the next three years, with 52 percent contracted to utilities and national oil and gas companies in Japan, South Korea, India, Taiwan and Singapore, a Bloomberg New Energy Finance analysis shows. A recent expansion of the Panama Canal that opened up the locks to massive tankers carrying the fuel may prompt the first cargoes bound for Asia, according to the report.

The U.S. is emerging as one of the largest suppliers of the heating and power-plant fuel in the world as America’s shale drillers seek to eliminate a glut of gas at home. Five export terminals are under construction across the nation with another two dozen projects under consideration. While suppliers have targeted Asia as a prime market for U.S. cargoes, shipments have so far been delivered most frequently to closer-by South America.

Watching Asia

“Everybody is watching Asia because they consume so much,” Bloomberg New Energy Finance analyst Anastacia Dialynas said by phone. “It’s impressive that so many have contracted for U.S. exports.”

More than half of the LNG shipments sent abroad by Cheniere, which became the first U.S. shale gas exporter in February, have gone to Argentina, Brazil and Chile, Dialynas said. Others went to Kuwait, the United Arab Emirates, Portugal and India.

“I don’t think anybody anticipated South America to be such a big purchaser,” she said.

One big advantage to sourcing U.S. supply is flexibility in long-term contracts. Australian exporters, for example, have required in agreements that their LNG be delivered to a certain destination. By contrast, those who contract with U.S. exporters including Cheniere Energy Inc., Freeport LNG Development LP and Dominion Resources Inc. have some flexibility in the volume they take and where it’s shipped, Dialynas said.

This also makes it difficult to predict where U.S. gas will end up in the world, she said. Of the U.S. export capacity slated to come online through 2019, about a third either isn’t contracted or is held by project investors, she said. Another 22 percent of the capacity is held by so-called portfolio buyers such as Royal Dutch Shell Plc.

Before it's here, it's on the Bloomberg Terminal.