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US set to turn natural gas exporter amid LNG boom

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LNG Industry,

According to the latest Reuters report, the last time the US was a net exporter of natural gas was in 1957. That should change in 2018 when the country is expected to become the world's third-largest exporter of LNG.

By the end of next year, US LNG export capacity in the lower 48 states will top 6 billion ft3 per day.

That growth in US LNG exports is set to transform world energy markets. Just a decade ago, before the shale revolution, the US was expected to become a growing LNG importer, not an exporter, likely dependent on Russian, Middle East and North African gas.

Instead, the US will become a competitor to the global gas powers by offering cheaper and more flexible cargoes and even a more politically palatable supplier to buyers such as the Europeans. The increased supply of North American LNG could bring more predictability to pricing through the development of more liquid trading markets.

The only other countries soon expected to supply more LNG to the world are Australia and Qatar.

The US started to export LNG from the lower 48 states when the first liquefaction train at the Sabine Pass terminal in Louisiana, built by Cheniere, opened in February 2016. Five additional export terminals are expected to open by 2020, built by units of Dominion Resources Inc, Kinder Morgan Inc, Sempra Energy and Freeport LNG.

Prior to this, the only natural gas exports from the lower 48 states were via pipeline to Mexico, and the US was a net importer overall of natural gas from Canada.

Since opening the terminal, Cheniere's stock price has risen more than 50%, and in 2016 it reported record revenue of US$1.28 billion. The company is expected to control more than half of the US LNG export capacity by 2020, making it one of the nation's biggest buyers of physical gas.

World LNG demand is expected to double to about 71 billion ft3 per day by 2040, up from around 32 billion ft3 per day in 2015, driven by the rapidly growing economies in Asia, especially China and India.

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