Latin America is growing market for US LNG exports, conference told

22 Dec 2017   Latin America, LNG

Despite the Asia-Pacific region’s strong potential demand, Latin America is becoming a steadily growing market for US LNG exports, speakers at a Washington conference indicated. “The trillion dollar question in LNG right now is when we’re going to see supply and demand flip,” said John McCarrick, deputy assistant secretary at the US Department of State’s Bureau of Energy Resources. “Some companies are preparing investments for as soon as 2019, but there are many variables,” McCarrick said during a panel discussion at the Institute of the Americas Dec. 15 conference, which focused on the Trump administration, Latin America, and energy. “The message the State, Energy, and Commerce departments are trying to get out is that the US is serious about increasing its LNG exports.”

Another panelist, Leslie Palti-Guzman, global gas director at Rapidan Energy Group LLC in Bethesda, Md., observed, “Volumes could depend on the global market’s appetite.” Projects that have received permits from the US Federal Energy Regulatory Commission and US Department of Energy still are awaiting customers, she said. “I expect more change on the business and commercial side than in governments,” she said. The panel’s moderator, Lisa Viscidi, Inter-American Dialogue’s energy, climate change, and extractive industries director, said as she began the discussion that since the US started exporting LNG in 2016, half of the cargoes have gone to Latin America. “We have demand in Argentina and Brazil as well as central Latin America, and Mexico is the world’s biggest customer for US LNG,” she said.

Brazil is increasing its LNG regasification capacity with three terminals running and three more planned, reported Edmar Luiz de Almeida, an economics professor at the Federal University of Rio de Janeiro. “We have experienced the worst recession in our history, but the economy is growing again,” he said. “The time for large hydropower projects to generate electricity in Brazil is over,” De Almeida said. “Projects being approved now primarily use renewable energy. US LNG export contracts are flexible, which is important in using it as a seasonal backup. We estimate we’ll need another 5 Gw of generation capacity in the next 10 years, and much of the power will need to come from LNG. Brazil can have an increasing share of US LNG exports.”

McCarrick noted, “Part of the problems some countries have is they lack the legal structures to attract outside investment. We’ve been working with several Latin American governments on this. We see energy as a great way to help them develop their economies to benefit their populations while weaning them away from depending on Venezuela, where there are so many problems.” Palti-Guzman said, “US LNG exports are driven by markets. Asia has been the strongest, but it’s a combination of countries. Mexico is a single country, and its demand is nearly as strong.”

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