MercoPress. South Atlantic News Agency

US LNG production forecasted to increase 20% and replace much of Russia's supply to Europe

In three years, investments in new US LNG facilities increased for the first time, bringing total capacity to 100 million tons by 2022.

United States will increase its liquefied natural gas (LNG) production capacity by 20% by the end of the year, making it the world’s largest exporter of the product as Europeans try to decrease their reliance on Russian supplies.

In three years, investments in new US LNG facilities increased for the first time, bringing total capacity to 100 million tons by 2022. A new LNG plant on the Gulf Coast in Louisiana will add a maximum capacity of 11 million tons.

This month, the new Calcasieu Pass LNG project operator announced that production has begun. Jera, a Japanese fuel procurement company, has already arrived at the port in preparation for the LNG transfer.

Jera is a joint venture between Tokyo Electric Power and Chubu Electric Power. The fuel’s final destination has yet to be determined, but it may end up in Europe if expenses in Asia are higher. The facility’s overall capacity accounts for around 15% of Japan’s LNG imports.

In January, the United States exported about 4.3 million tons of LNG to Europe, according to market data provider Kpler, accounting for about 60% of total exports. A year earlier, it was 10%.

About a third of the gas consumed in Europe originates in Russia. But Russian state energy Gazprom’s exports to the European Union in January were down 40% from the same month a year earlier to 5.8 million tons, a situation that can be expected to worsen as a direct consequence of the Ukraine war..

The combined capacity of plants in the United States, including those in the design or construction phase, totals 30 million tons, the highest level in eight years, according to research firm Rystad Energy.

Natural gas output has just surpassed the records set in the second half of 2019.

On the other hand, LNG plants take three to four years to build. This means that the US will not materialize the outcome of this year’s investments until 2025 or later.

In effect US LNG shipments could in the future replace some 70/80% of Russian deliveries to Europe based on January numbers alone. However, using 2020 as a baseline, a year before Russia limited supplies, US gas exports to Europe would account for roughly 40% of Russian supply volumes.