NEW REPORT - LNG in Latin America: A new focus

The global Liquefied Natural Gas (LNG) market is in the midst of a revolution. On the one hand, export capacity has expanded strongly due to the vertiginous increase in shale gas production in the United States and the incorporation of liquefaction capacity in countries such as Russia and Australia. On the other hand, demand has also increased as natural gas replaces coal as a thermoelectric fuel source, particularly in Europe and Asia.

To this end, in 2018 the volumes of LNG traded on the global market grew 8% with respect to the previous year and tripled in relation to the year 2000, according to the International Group of Importers of Liquefied Natural Gas (GIIGNL). There is every indication that this trend will not subside in the coming years. According to a recent study by KPMG, natural gas will overtake coal to become the world's second fuel source in the next decade. With this trend underway, the LNG trade will double current levels by 2040.

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These global movements are starting to be felt in Latin America. At the beginning of the current decade, natural gas reserves and production were insufficient and, in response to this, several countries in the region such as Brazil, Mexico, Argentina, Chile and Colombia had to resort to increasing LNG imports to cover demand. But conditions have been changing and in some countries a slow change of direction is evident, with projects focused not only on imports, but also on exports.

Argentina is in the vanguard of this shift. Thanks to the sharp growth of gas production at the unconventional Vaca Muerta field, the country will start exporting LNG in the second half of this year. In the medium term Brazil could be added, benefiting from rising production from its vast pre-salt fields. Also in the medium term, Bolivia could become an exporter of LNG, if a project aimed at dispatching surplus gas from a liquefaction plant in Peru goes ahead. These countries would join Peru and Trinidad & Tobago, the only two current LNG exporters.

In this report we will describe the evolution and the current state of the LNG market in Latin America's main countries. In addition, we will identify the region's most important regasification and liquefaction projects while forecasting future activity in both the the import and export segments.