US LNG producer Cheniere Energy sees a supply gap equating to one quarter of current global LNG trade once Russian pipeline gas supplies are completely cut off.
Speaking on the company’s 2022 results call, Cheniere executive vice president and chief commercial officer Anatol Feygin said Europe’s shift away from Russia created a supply gap of 70bn cbm in 2022. That will likely rise to 110bn cbm in 2023, or 100 million tonnes per annum.
He said the need for further investment in LNG capacity was “laid bare” last year, and in the next few decades both the supply and demand side are supportive of new liquefaction infrastructure.
Cheniere president and chief executive Jack Fusco said Cheniere produced 44m tonnes of LNG last year, 72% of which was directed to Europe. That demonstrated the value of destination flexibility, which he said the company pioneered.
He highlighted that the company now has 30 mtpa of new LNG either under construction or development.
Cheniere announced on Thursday that it plans to bring 20 mtpa of new liquefaction on stream before the end of this decade comprising three new trains of around 6.5 mtpa each, at its Sabine Pass LNG site. A boil-off liquefaction plant could add up to 1 mtpa.
The company started the regulatory prefiling process for this in February 2023 and expects to make a full filing by the end of this year.
Fusco said this new project will be a “major priority” in 2023, with the company’s team working on “actively commercialising” these volumes.
Cheniere also announced it has started pre-filing on two additional midscale liquefaction trains at its Corpus Christi site.
The company is already building seven midscale liquefaction trains totalling 10 mtpa there after taking a final investment decision on this Corpus Christi LNG Stage 3 project in June 2022. Construction of this project is almost 25% complete.
Cheniere exported a record 638 LNG cargoes during 2022, a jump from 2021’s high of 566.
The US’ largest LNG producer with 55 mtpa of production capacity on stream, the company has exported around 2,650 cargoes in total from its two projects.
Feygin highlighted the change in trade flows in the global LNG market.
During 2022, US LNG production grew by 6.3 mtpa, while in contrast that in the rest of the world fell by 9.6 mtpa.
Total LNG trade grew by 5% last year or 18.7m tonnes, Cheniere said, with Europe taking in an extra 45.7m tonnes but China’s imports were down by 15.9m tonnes.
The company detailed that about 70% of all US LNG in 2022 was shipped to Europe, double the 35% exported there a year earlier.
Feygin, who expects volatility to continue to dominate markets, said there is over 370m tonnes of regasification capacity under development worldwide, which is equivalent to around 80% of the current global LNG trade today. Nine new markets are developing LNG import capacity.
Cheniere turned in a net profit of $1.4bn for 2022, a turnaround on the net loss of $2.3bn reported in 2021.
The company attributed the improvement to increased margins on its LNG and the volumes delivered, partially offsetting unfavourable changes in derivatives and income tax provisions.
The outfit’s revenue for the year more than doubled to $33.4bn, from $15.9bn a year earlier.
Cheniere said that during 2022 it signed long-term contracts for an aggregate of over 180m tonnes of LNG for the period through to 2050 in both free-on-board and delivered ex-ship deals.