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U.S. exports of liquefied natural gas remained close to record levels last month, at 7.29 million tons, or the second-highest since records of such exports began.
According to Refinitiv Eikon data, Reuters reported that the May total was a 12-percent increase on the year and also a substantial increase on April, when U.S. LNG exports totaled 6.93 million barrels.
The United States is on track to overtake Qatar and Australia as the world’s largest LNG exporter this year as producers rush to boost capacity amid strong demand for the commodity.
However, gas production would also need to grow if the U.S. is to meet the global demand for its LNG, Reuters’ John Kemp wrote in a recent column. And it would need to grow substantially.
Kemp noted that over the first three months of the year, U.S. LNG exports rose by 674 billion cu ft. At the same time, however, production of natural gas only grew by 433 billion cu ft, while domestic consumption remained flat.
This prompted producers to tap reserves, which resulted in a solid draw in gas inventories: at the end of March, gas inventories were 318 billion cu ft below the pre-pandemic five-year average.
The strong and quite fast increase in LNG exports has also had some industry observers worried about price developments at home. Natural gas prices have already almost tripled, and some expect them to rise further, putting a strain on domestic consumers.
Europe remained the top destination of U.S. LNG shipments for yet another month in May, taking in two-thirds of total exports.
“All factors remaining constant - such as no further cuts in Russian gas to Europe - we may see a rebalance of LNG vessels away from the region, which has become a black hole for LNG - drawing in all and every available cargo,” Rystad Energy analyst Lu Ming Pang told Reuters.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.