Global supply trends

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LNG supply posted another healthy y/y gain of 2.7 Mt in July, albeit the smallest increment since February. Still, H1 19 numbers are up by 23.7 Mt y/y, and Q3 19 numbers should start to benefit from ramping up at new terminals, with the 4.0 Mt Cameron T1, the 3.6 Mtpa Prelude and the 4.5 Mtpa Corpus Christi T2 all starting to put cargoes into the market. Q3 19 promises the start-up of the 4.4 Mtpa Freeport T1 in September or late August, while around the same time, the first 1 Mtpa of capacity at Elba Island could start exporting. Still, even with prices low, there continues to be interest in new supply deals. Tellurian has notably secured its first binding supply deal with Total, and Novatek has sold the last of its offered volumes from its Arctic LNG-2 project, promising another project FID shortly.

Initial indications from cargo-tracking data and customs data suggest that global LNG exports in June came in around 4.0 Mt higher y/y, with July exports up by around 2.7 Mt y/y. The first export from the 4.5 Mt Corpus Christi T2 occurred at the start of the month, the 3.6 Mtpa Prelude has sent out its second cargo, and feedgas into Cameron has continued at a brisk pace despite Hurricane Barry, allowing Cameron to ramp up production and export its fourth cargo. With Sabine Pass trains all ramped up and regularly exporting, the US remains a standout for y/y growth—up by 0.9 Mt y/y, in line with our expectations.

Kpler data put the y/y growth for July as continuing to slow from Australia, with indicative y/y growth at 0.6 Mt y/y. There remain questions over the status of the 4.2 Mtpa Ichthys 2, but the Ichthys facility is largely producing at a plateau of 0.16 Mtpw, suggesting that if it is operating, it is doing so at relatively low levels of utilisation. Russian supply is up by 1.0 Mt y/y, showing a modest sequential m/m gain as Sakhalin maintenance finished in June. Russian increments will start to fall in H2 19, reflecting the start-up of two Yamal trains in H2 18, so that Russian exports will see little incremental growth from 2020. Novatek has sold off the offtake it was targeting for the 19.8 Mtpa Arctic LNG-2 project, and we expect an FID on that project in the coming months. An FID on this project and the level of new LNG supply capacity sanctioned this year will increase to 84 Mtpa. With Qatar also likely to take an FID on its 33 Mtpa mega-project, that could push 2019 sanctioned supply projects up to 117 Mtpa.