Despite the Covid-19 pandemic’s impact on energy markets, global liquefied natural gas (LNG) imports increased by 0.4% last year to 356.1 million tons (Mt), driven in part by supply additions from the United States, according to the International Group of LNG Importers (GIIGNL). 

While the pandemic cut into demand across commodities, GIIGNL said the “LNG trade has proven resilient, increasingly diverse and global.” 

The United States again accounted for most of the world’s new volumes, exporting 44.8 Mt last year, compared to 33.75 Mt in 2019, according to GIIGNL. The 11 Mt growth was driven by the commissioning of U.S. projects in both 2019 and 2020, including Cameron LNG trains 2 and 3, Corpus Christi train 3, and Freeport trains 2 and 3.

Not only did U.S. LNG underpin supply growth as it has in recent years, but it continues to add flexibility to the market, GIIGNL said in its annual report. The trade group said last year was marked by “outstanding growth” in spot and short-term transactions. Volumes for both types of deals increased to 142.5 Mt, up nearly 20% from 2019 to account for 40% of all LNG trade last year. 

“The decrease of natural gas and LNG demand, which resulted from lower economic activity on a global scale, led to depressed spot LNG prices during most of 2020, incentivizing spot and short-term purchases in many countries,” the report said. 

The LNG industry is evolving as more market participants trade with more financial instruments available to hedge risks. That’s led to an increase in spot deals in recent years. GIIGNL said the United States was again the leading exporter of spot and short-term LNG, accounting for 21.3% of all those volumes last year, followed closely by Australia, which accounted for 19.9% of spot market deals. Spot deals generally include volumes delivered within three months of a transaction date, while short-term deals may cover a few years.

In addition to selling uncontracted LNG into the spot market, U.S. liquefaction terminals offer more flexible contracts with fewer restrictions, allowing offtakers to retrade cargoes. For example, U.S. buyers might sell a cargo two or three times in the spot market before it is lifted. That compares to more traditional long-term deals that prohibit vessels from diverting to different markets not specified in the contract or retrades. 

Australia also added 2.4 Mt of new supply last year and surpassed Qatar for the first time as the world’s leading exporter, shipping 77.8 Mt overseas. Qatar exported 77.1 Mt last year, according to GIIGNL. Russia also added supply and was the fourth largest exporter behind the United States, with 29.6 Mt of volumes, the report said. 

Following a strong start to 2020, LNG demand weakened in the second and third quarters. Still, the market again tightened as the year came to a close because of unplanned liquefaction outages and colder weather. The volatility, GIIGNL said, created more arbitrage opportunities that led to a year/year increase in reloads, which occur when previously imported volumes are exported to different markets to capture price premiums. Reexports increased to 2.6 Mt in 2020, compared with 1.6 Mt in 2019. 

GIIGNL noted that Asia continues to be the world’s top importing region, accounting for 71% of global LNG imports. Asian imports grew by 3.4% year/year in 2020, reaching 254.4 Mt. 

Japan imported 74.4 Mt last year, down from 76.8 Mt in 2019 due to pandemic-related lockdowns, GIIGNL said. However, the country remains the world’s leading LNG importer.

It was the opposite case in China, which saw the biggest increase in LNG imports last year, jumping by 7.2 Mt to 68.9 Mt overall. China is the world’s second largest importer, followed by South Korea, where intake was 40.8 Mt last year, according to the report. 

In Europe, LNG imports declined by 5% year/year in 2020 to 81.6 Mt, mainly as the result of pandemic-related lockdowns, GIIGNL said.