The US became the world’s largest exporter of liquefied natural gas (LNG) in the first half of 2022. The country’s LNG exports increased 12% to an average of 11.2 billion cubic feet per day (bcfd) in the first half of 2022 in comparison to that in the second half of 2021. The LNG export capacity of the US expanded by 1.9 bcfd since November 2021 due to increase in production capacity at Sabine Pass and Corpus Christi LNG facilities.
Exports of LNG by the US
Over the past several years, LNG exports from the US increased significantly as countries attempted to move away from the use of coal. According to GlobalData, the US exported 14% of its LNG to South Korea, followed by Japan and Brazil with 11.7% and 10.4%, respectively, in 2021. The country’s exports were aided by an increase in LNG export capacity, increase in the prices of natural gas and LNG globally, and increase in global demand, especially from Europe. Since the fourth quarter of 2021, spot prices of LNG in Europe and Asia were higher than historical levels and in early 2022, the prices soared to record highs amid Russia's invasion of Ukraine.
Growth Aided by Russia-Ukraine Conflict
Natural gas exports from the US increased since Russia invaded Ukraine and Europe began to look for natural gas outside Russia. In response to the increasing uncertainty over the supply of gas from Russia, the US is exporting record amounts of LNG to Europe to assist EU allies in their attempts to fill gas storage facilities in time for the next winter. According to the US Energy Information Administration (EIA), 64% of the country’s LNG exports went to the European Union and Britain during the first five months of 2022.
Outlook
Even though the US is currently the largest exporter of LNG, there are limits to the amount of natural gas that the country could export. According to EIA, LNG exports could decline in the second half of 2022 after an outage at the Freeport LNG terminal drastically reduced export capacity. The terminal provides around 20% of the LNG processing by the US. With the demand for LNG being substantial, the major challenge for the US is whether it will be able to supply enough natural gas to meet the demand and whether there will be sufficient LNG export infrastructure to transport it to other countries.
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