Europe boosts demand for US natural gas

From January to July, natural gas exports from the United States climbed 7% annually to a record 19.246 million cubic feet per day (mmcfd), driven by growing demand from European countries seeking to reduce their dependence on Russian natural gas.

Within this figure, it can be seen that shipments of natural gas in gaseous state (through pipeline) decreased 1.1% to 8,372 MMCFD, but exports of the molecule in its liquid form (liquefied natural gas) grew 14.3% to 10,881 MMCFD. , according to figures from the Energy Information Administration of the government of that country (EIA, for its acronym in English).

Last year, shipments in the liquid state of the molecule surpassed exports in the gaseous state for the first time, and that trend is set to continue this year. As of July, 56.5% of total exports were made in a liquid state and 43.5% in a gaseous state.

The engine of purchases of fuel of American origin is notably Europe, a region that faces a squeeze on supply due to the reduction in imports from Russia amid sanctions for the invasion of Ukraine ordered by Moscow and the intention of a handful of countries to reduce their dependence on the Russian molecule.

France has climbed to become the No. 1 European market for US fuel (and No. 3 globally), with exports tripling to 1.64 MMcfd to represent 8.5% of total shipments.

Spain, for its part, multiplied its purchases by four to a volume of 1,374 MMCFD; while orders from the UK doubled to 937 MMcfd, double compared to the first quarter of 2021.

In this period, the average price of US natural gas in gaseous state grew 87.1% year-on-year to 6.24 dollars per million BTU, the highest value for an equal period since 2008, when it reached 10.17 dollars per million BTU. It should be noted that the export price in a liquid state can be double due to the liquefaction costs and the freight by ship.

Mexico remains the main market

Meanwhile, Mexico continues to be the main destination for US exports, but our country faces growing competition to obtain the molecule from the United States (mainly from the state of Texas), which despite its rise in price continues to be the cheapest in the world. .

Mexican purchases amounted to 5,787 million cubic feet per day, a figure that was 3.7% lower than that of the first seven months of 2021 and represented only the second year-on-year drop in the last decade.

This volume represented 30.1% of the total volume exported by the United States, a share that has been halved from the maximum share of 60.1% reached in 2016. Canada is the second market with shipments of 2,604 million cubic feet per day (+3.2 %), which are equivalent to a coverage of 13.5 percent.

Nearly two-thirds of the natural gas consumed in Mexico is used to generate electricity, and about 70% of national demand is met by imports. Natural gas is also responsible for about 60% of the national electricity production.

octavio.amador@eleconomista.mx