North American LNG Projects Racking Up Buyers, Mostly in Asia

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Eighteen deals to buy North American LNG have been inked so far this year, amounting to 27 million tons per year, or 3.84 billion cubic feet per day (see table). But this latest wave of contracting appears to be more a continuation of previously established buying momentum — from mostly Asian buyers — than a reflection of European demand sparked by Russia's invasion of Ukraine.

North American LNG Deals in 2022
DateBuyerSellerFacilityVol. (million tons)Duration (years)Deliveries ExpectedPrice IndexF.o.b./ d.e.s.Type
Jan 19WoodsideCommonwealthCommonwealth2.00202026NANAHOA
Mar 7ShellVenture GlobalPlaquemines LNG2.00202027NANA--
Mar 18New FortressVenture GlobalCP21.00202028NANA--
Mar 18New FortressVenture GlobalPlaquemines1.00202027NANA--
Mar 24GuangdongNextDecadeRio Grande LNG1.50NA2026NANAHOA
Mar 29ENN Natural GasEnergy TransferLake Charles LNG1.80202026HH plus fixed feef.o.b.--
Mar 29ENN Energy HoldingsEnergy TransferLake Charles LNG0.90202026HH plus fixed feef.o.b.--
Mar 31TotalEnergiesSempraVista Pacifico1.32NANANANA MOU
Apr 5Guangzhou GasMexico Pacific Ltd.Mexico Pacific2.00202027NANA--
Apr 6ENNNextDecadeRio Grande LNG1.50202026HHf.o.b.--
Apr 22KogasBPCalcasieu Pass or Freeport1.58182022HHf.o.b.--
May 2EngieNextDecadeRio Grande LNG1.75152026NAf.o.b.--
May 3GunvorEnergy TransferLake Charles LNG2.20202026NANA--
May 4SK Gas TradingEnergy TransferLake Charles LNG0.40182026HH plus fixed feef.o.b.--
May 10ExxonMobil LNG Asia PacificVenture GlobalPlaquemines LNG1.00NA2027NANA--
May 10ExxonMobil LNG Asia PacificVenture GlobalCP2 LNG1.00NA2028NANA--
May 11PetronasVenture GlobalPlaquemines LNG1.00202027NANA--
May 16PGNIGSempraCameron Phase 2, Port Arthur3.00202027NAf.o.b.MOU

Most of the contracts are foundation deals for new US or Mexican export projects involving 20-year durations and deliveries starting in 2026 or later.

Despite European countries scrambling to wean themselves off Russian gas in the wake of the Ukraine conflict, North American/European dealmaking has been light so far this year as Europe remains a question mark in terms of long-range gas demand.

"It's too early to say that anything now is the result of the war," said Ian Nathan, director of LNG research at Energy Intelligence, "even if we can hypothesize that some deals have been accelerated."

And as Sempra Chairman and CEO Jeffrey Martin during an earnings call earlier this month: "Over the long term, I want to emphasize that Asia remains the No. 1 growth market for US LNG."

China Dominates Dealmaking

Asian buyers are dominating the contracting for North American LNG, accounting for about 14.9 million tons/yr since Jan. 1, or 54%. If traders and portfolio players are included, that's about 21.9 million tons/yr, or about 81%.

China accounts for 29% of all US volumes and 52% of Asian volumes so far in 2022, but "you can't look at these deals in a vacuum," explained Nathan. He noted that Chinese buyers were scooping up LNG "all year long" in 2021 with sellers in the US, Qatar and elsewhere, but few were foundation deals intended to support new or emerging export projects.

This year, with China having run its course with the previous set of sellers, it is now turning to newer — or long dormant — North American ventures. China had been keen to sign up with established players, but "that seems to be over, Nathan said. "Once the US system was proven, it was easier to make these [new project] deals."

He also credited the push from Beijing for second-tier Chinese buyers, such as ENN, that emerged following regulatory changes at home.

In a report this week, Wood Mackenzie noted a change in China's approach. "Most new contracts are from US supply as operators move projects forward. All these contracts are linked to North American prices," it said.

The firm noted that that in 2020 and early 2021, the Chinese "targeted oil-linked Qatar volumes. Since mid-2021, Chinese buyers have targeted Henry Hub deals with liquefaction tariffs below $2 per million Btu."

Too Soon for War Effect

While almost every deal counterparty is capable of trading LNG around the world, only two deals specifically involved European buyers. The first was a deal in which French Engie purchased 1.75 million tons/yr for a 15-year duration starting in 2026 from NextDecade's Rio Grande LNG.

The other deal involved Poland's PGNIG purchasing 3 million tons/yr from Sempra for a 20-year term starting in 2027 from its Cameron Phase 2 and/or from its Port Arthur, Texas, LNG export project.

But Nathan predicted that the market, over time, will "start seeing more deals that are more a result of the impact of hostilities."

It is also too early to see the effects of Russia's curtailed LNG ambitions. A ramp-up from the 30 million tons exported last year to 140 million tons in the 2030s is no longer likely to happen as a result of an exodus of partners and technology providers from Russian projects since the war began.

"The Chinese are going to get hit hard by Arctic LNG 2; this is where they invested," said Nathan in reference to that 19.8 million ton/yr, three-train Russian project now being limited to a 6.6 million ton/yr single train by war-related sanctions. However, the loss only amounts to about 5 million or 6 million tons of supply, "which might not be as big an impact as it sounds."

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