Latin American LNG imports so far this year haven’t changed compared to last year as drops in Brazil imports are being offset by gains elsewhere.
From Jan. 1 through to Aug. 29, Latin American imports of liquefied natural gas were 8.42 million tons (Mt), compared to 8.3 Mt in the same period last year, according to data from Kpler.
“We have seen a significant decline in Brazilian LNG imports due to robust hydropower reservoir levels which has reduced the call on gas-fired power plants,” Kpler senior analyst Laura Page told NGI’s Mexico GPI.
“However, that volume has been offset by rising deliveries into Caribbean countries on the back of oil-to-gas fuel switching in the power sector, El Salvador ramping up LNG imports after importing its first ever cargo in April 2022 and Colombia beginning to increase LNG imports amid low hydropower reservoirs.”
Brazil’s imports of LNG are down significantly so far in 2023, to 540,000 tons, compared to 1.65 Mt in the same period last year. Colombia’s imports are four times higher compared to last year, but still marginal at 200,000 tons. Jamaica saw an important jump of 420,000 tons, reaching 1.12 Mt, according to Kpler.
Mexico LNG imports meanwhile rose to 480,000 tons, from 280,000 tons. The country now relies principally on pipeline imports from the United States to meet its growing natural gas demand.
“Latin America is a seasonal LNG importer and as some of the larger importers – Argentina, Chile, Brazil – are now coming out of the peak winter season, we expect LNG imports into the region to drop in September and remain weak through the northern hemisphere winter season,” Page said.
“As a result, we don’t expect Latin America to be a major competition for Europe over the coming months.”
Changing Trends
Chile so far this year has been the top LNG importer in Latin America as it continues to phase out coal from its energy mix. Natural gas was the top fuel source in electric power production during the first half of the year, accounting for 26% of generation, according to statistics from trade group Generadoras de Chile.
Chilean LNG imports rose to 2.1 Mt year-to-date, from 1.99 Mt.
Argentina’s LNG imports also rose to 1.74 Mt, from 1.66 Mt.
But this trend is set to change with the Nestór Kirchner pipeline now online, providing Buenos Aires additional natural gas from the giant Vaca Muerta shale deposit.
“In Argentina, LNG imports will decrease substantially,” Alvaro Rios, the managing partner of consultancy Gas Energy Latin America, told NGI’s Mexico GPI.
“We will see less volumes now that the Néstor Kirchner pipeline is completed,” Rios said. With flow reversal on the Transportadora de Gas del Norte (TGN) system allowing for Vaca Muerta natural gas to reach northern Argentina, “the country will import less and less. It might become an exporter.”
Chile is also going to use less LNG, Rios said. “Argentina exports are currently going to central Chile. This [Southern Cone] summer you might see the first volumes in northern Argentina going to northern Chile with the reversal of TGN. So small volumes will get to northern Chile via pipeline.”
Rios however added that “seasonality in Brazil remains the main theme. With three more regas terminals being developed, the trend for LNG is to go up in Brazil.”
He said another import terminal could also come online in Colombia, which uses natural gas principally as backup when rainfall is low. But, “Colombia has serious problems with supply. Those two terminals might be a reason to see more LNG in Colombia.”
He also thinks Bolivia, long the region’s main natural gas supplier, will start importing volumes starting in 2030, most likely from Argentina.
Overall, the region should see more need for LNG.
Wood Mackenzie predicts that natural gas demand in Latin America will increase by an average of 1.4% annually over the next decade, stabilizing at around 25 Bcf/d. But gas supply is expected to decline at a rate of 5.6% in that timeframe. Wood Mackenzie analysts think that yet-to-find resources could stabilize Latin American supply at about 15 Bcf/d, with the right policies in place.
This would imply greater needs for LNG imports, which is also in line with the worldwide picture.
In the Global Outlook to 2050 published on Monday, ExxonMobil researchers said they saw global natural gas demand rising by 20% by 2050. Notably, worldwide LNG exports are forecast to “meet about 50% of the growth in gas demand to 2050.”
Researchers said that in 2021, global LNG trade met about 10% of worldwide natural gas demand. By 2050, the liquefied natural gas trade is likely to nearly double, with the Asia Pacific region set to absorb about 85% of the growth over the period.
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