BAKU, Azerbaijan, March 30. Substantial increase in LNG exports to EU will limit exports to other recipients, Trend reports with reference to Fitch Solutions.
“On March 25, President Joe Biden and European Commission President Ursula von der Leyen announced a new LNG supply agreement, under which EU27 will substantially increase LNG imports, starting in 2022. We recognise that the new deal will drastically change LNG market dynamics, should the US produce the additional supply. We expect the US to produce enough natural gas to supply its LNG facilities, which in turn have the capacity to produce 15bcm of additional supply bound to Europe. However, diverting new US LNG supply to Europe will likely cause other legacy recipients of US LNG to see surging price premia, which in turn could lead them to sourcing supply elsewhere,” said the company.
Fitch Solutions notes that the new supply agreement assumes an increase in US LNG exports to EU27 by 15bcm by the end of 2022 with a target of 50bcm of additional supply by 2030.
“In 2021, EU27 imported 22.7bcm of US LNG, which marked an 11.2 percent y-o-y increase from 2020. On the supply side, the US export LNG peak capacity lingered at 116bcm in 2021. We expect new LNG export capacity to come online in the US over the near term. Venture Global shipped the first cargo from its Calcasieu Pass facility in March 2022, while Cheniere concluded the commissioning of Sabine Pass Train 6 in February 2022, which raised our estimate of peak capacity to 135bcm/y in 2022,” the company said.
Fitch Solutions expects US LNG exports to grow to 124bcm in 2022, which indicates that available export infrastructure will likely continue to be used at full capacity, allowing for maintenance and routine stoppages.
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