ARKANSAS, February 2 (Future Headlines)- The landscape of U.S. liquefied natural gas (LNG) exports faced challenges in January, with cold weather and outages at Freeport LNG, the second-largest exporter, contributing to a reduction in exports below the December record. LSEG ship tracking data revealed that U.S. producers exported 8.3 million metric tons (MT) of LNG in January, marking a nearly 5% decrease from December’s 8.7 MT. Despite the month’s challenges, the U.S. maintained its position as the largest LNG exporter in 2023.

U.S. LNG exports in January totaled 8.3 million metric tons (MT), reflecting a decrease of almost 5% from the December record of 8.7 MT. The reduction was attributed to cold weather conditions and outages at Freeport LNG. Freeport LNG, the second-largest exporter, faced operational challenges in January. Outages were attributed to problems with an electric motor at one of the liquefaction units at its Quintana Island, Texas, facility. The issues arose during the state’s mid-January Arctic freeze.

Freeport LNG anticipates that one of its liquefaction units will be out of service for approximately a month to address the electric motor issues. Consequently, weaker LNG exports are expected to continue in February, impacting overall export figures. Europe remained a dominant receiver of U.S. LNG exports in January, receiving 5.54 MT, representing 67% of the total. Asia’s share was 1.42 MT, constituting 17% of the total. The distribution reflects Europe’s increased share from December, while Asia’s take declined.

Attacks by militants in the Red Sea and ongoing drought conditions at the Panama Canal have prompted LNG tankers to opt for longer journeys to Asia, circumventing these challenging routes. The shift involves crossing the Cape of Good Hope, potentially altering the destination dynamics for U.S. LNG exports. Transit challenges at the Panama Canal and the Red Sea have raised the possibility of a more efficient market, allowing for trade without the necessity of navigating through these risk-prone channels. This could influence the distribution of U.S. LNG, potentially favoring Europe or regions within the Americas over Asia.

Benchmark prices in Europe slightly decreased to $8.7 per million British thermal units (mmBtu) from $8.8 mmBtu on a weekly basis. Meanwhile, Asian spot prices dipped to $9.2 per mmBtu from $9.6 week-on-week, with muted demand in East Asia contributing to the decline. Latin America saw an increased share, accounting for 8.1% of January shipments, up from less than 6% in December. The cargoes were directed to countries including Brazil, the Dominican Republic, Colombia, and Jamaica. Freeport LNG has encountered a series of operational issues since its return to full service in the previous year following a fire and explosion in 2022. The recent electrical issue necessitating the replacement of a refrigeration electric motor adds to the company’s operational challenges.

The January figures and the ongoing challenges faced by U.S. LNG exporters underscore the complexities of the global LNG market. The interplay of weather conditions, transit challenges, and operational issues at major facilities contributes to the dynamic nature of LNG trade, with potential implications for regional distribution and market dynamics in the coming months.

Reporting by Moe Khaled; Editing by Sarah White