South America LNG Demand Rising Amid Mix of Drought, Market Factors

After two years of slumping liquefied natural gas (LNG) demand in South America’s major economies, the tide this year has shifted.

Even as the first ever cargo of LNG is arriving this week in Mexico’s Baja California Sur, the country in fact has seen a sharp slowdown in LNG imports at its Manzanillo and Altamira terminals this year. That slowdown comes as about 13 Bcf/d of import capacity via pipeline from the United States is now online.

Further south, though, demand is booming, principally because of market factors coupled with the worst drought in Brazil in over a century. 

So far this year, LNG imports are up 60% in Brazil, according to consultancy Timera Energy. Some of this new demand is pulling Atlantic cargoes away from Europe, contributing to a surge in European...