A sharp rise in global prices for natural gas is proving a relief for companies seeking to export more of the fuel from the US, after a year of setbacks from coronavirus and glutted supply. Liquefied natural gas delivered into east Asia surged above $10 per million British thermal units in Asia this month on the back of cold weather and supply interruptions. The rally spilled into Europe, with gas in the UK selling for a third more than a year ago.
The prices are well above markets in the US, improving the economics of exporting American gas. Shares of Cheniere Energy, the largest US LNG exporter with two terminals in Louisiana and in Texas, have outpaced the stock market in the past month. While most of the company’s sales are committed under long-term contracts, the Houston-based company “is able to capitalise on higher spot LNG prices” by selling uncontracted volumes through its trading arm, Cheniere Marketing, Morgan Stanley said.
In 2016, Cheniere was the first company to export gas overseas from the prolific US shale fields. Export volumes in November reached a new record. The Energy Information Administration predicts that American LNG exports will average 8.5bn cu ft/d in 2021 — or 65m tonnes a year — a 30 per cent increase from 2020. “We assume near-max utilisation rates of US LNG export facilities next year,” Bank of America said.