US: An LNG Exporting Country?

U.S. Natural Gas production is rising every year since 2006 due to the success of producing shale gas. As the global demand for Liquified Natural Gas (LNG) is projected to grow over the next few years U.S. may become a major exporter of LNG to other countries competing against established played like Qatar and Russia according to a research report by Societe Generale.

Since LNG is currently exported from many countries with political risks, the U.S. will have the advantage of supply diversity.Despite the advantage the authors of the report identify several factors that may prevent the U.S. becoming a major LNG exporter.

From the report:

First, the LNG approval process may prove long and uncertain.Second, the political debate is really a matter of who will collect the rents associated with an abundance of domestic gas resource: the domestic gas producers vs. the domestic manufacturers. Third, current market conditions do not define long-term commerciality. Higher US gas prices and lower Asian gas prices within the next few years are likely to mitigate the profitability of US LNG exports.

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Source: US: BECOMING A LNG EXPORTER. Societe Generale

The US has overtaken Russia as the leading producer of LNG and is projected to maintain the top spot at least until the end of this decade.

In addition to the US, currently the major natural gas producing countries are Russia, Qatar, Nigeria, Iran, Malaysia, Algeria, Indonesia and Australia.

The following chart the estimated shale gas resources worldwide noting large large technically recoverable resources (TRR):


It should be noted that the US already exports natural gas by pipelines to Mexico and eastern Canada. However companies are now considering exporting it to other countries by super tankers.

Related ETFs:

United States Natural Gas ETF (UNG)
ProShares Ultra DJ-UBS Natural Gas ETF (BOIL)

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