Rising global demand for natural gas is a growth opportunity for US LNG producers but delivering on the opportunity will depend on timely construction of natural gas pipeline infrastructure to support new US LNG supplies, and on continued availability of long-term offtake commitments to back financing for LNG infrastructure, Moody’s said in a research note. Europe’s energy crisis should keep the LNG market tight until 2025-26, supporting cash flow generation for US LNG producers. Europe’s 2022 LNG imports increased by 50 billion cu m (bcm) from 75 bcm in 2021, according to the International Energy Agency (IEA), as Russia’s piped natural gas exports to the EU shut down. Meanwhile, China’s reduced domestic demand in 2022 allowed Chinese importers to redirect their contracted LNG volumes to the high-priced European spot market and help Europe to avoid major shortages. A potential recovery in Chinese domestic demand in 2023 will bring back the risk of natural gas supply in Europe, especially after the EU in December 2022 capped regional market prices, Moody’s said. “European demand might accelerate LNG capacity expansion in the US, but that would require long-term offtake commitments from European buyers, even as they are working to reconcile new energy […]
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