U.S. Aug. LNG Imports Drop 63% on Asian Demand, Consultant Says

By Dinakar Sethuraman

Sept. 2 (Bloomberg) -- Shipments of liquefied natural gas to the U.S. declined by 63 percent in August on increased domestic production and higher Asian demand, a consultant said.

The total supply of natural gas from imported LNG during August 2008 fell to 30.7 billion cubic feet from 83.2 billion in August 2007, Pan EurAsian Enterprises, Inc., a U.S. LNG consultant, said in an e-mailed report yesterday. Total imports this year dropped 61 percent to 236.9 billion cubic feet.

Shipments of LNG may fall to 360 billion cubic feet of re- vaporized natural gas, the smallest amount since 2002, because higher domestic production of the cleaner-burning fuel keeps prices lower than in Asia and Europe, Pan EurAsian said in July.

``Market conditions in the global LNG business have changed dramatically in the past year with Asian demand for LNG picking up strongly in a supply-constrained marketplace,'' Pan EurAsian said. ``Prices for LNG in Asia are approaching $20 per million British thermal units versus natural gas market prices in the U.S. (Henry Hub) that are around $8 per million Btu.''

The price gap has led to traders diverting LNG shipments away from the U.S. and northern Europe to buyers in Japan, South Korea, China, India and Taiwan, according to the report.

The drop in imports has occurred even after the opening of U.S. LNG import terminals at Northeast Gateway, Massachusetts Bay and Sabine Pass, Louisiana, Pan EurAsian said.

Re-vaporized natural gas is fuel that's converted from the chilled, liquefied form.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.