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The biggest U.S. LNG exporter, Cheniere Energy Inc (NYSE: LNG), reported on Thursday a decline in third-quarter revenues and profits amid decreased market volatility and lower international LNG and natural gas prices.
Cheniere Energy booked $3.763 billion in total revenues for Q3, down from $4.159 billion for the same period last year. LNG revenues dropped to $3.554 billion from $3.974 billion, amid “significant declines of historic volatility in international gas prices and moderated and sustained spot prices in the current periods relative to the same periods of 2023,” the company said in an SEC filing.
Net income attributable to Cheniere nearly halved to $893 million, down from $1.7 billion a year earlier. The company attributed the decline to lower sales volumes under short-term agreements as a higher proportion of its LNG was sold under long-term contracts.
The drop in revenues was the result of declining international LNG and gas prices and a reduction of volumes sold under short-term agreements as a result of additional long-term agreements commencing after the third quarter of 2023, Cheniere Energy said. Part of the decline was attributable to declining Henry Hub pricing, the U.S. natural gas benchmark, to which the majority of Cheniere’s long-term LNG sales contracts are indexed.
Lower LNG and natural gas prices, as well as lower margins for delivered LNG cargoes, have been weighing on Cheniere’s earnings this year.
The company, however, is upbeat about long-term LNG demand, especially in Asia, which is the key growth driver of LNG consumption globally.
Chinese demand for natural gas is set to jump by more than 50% by 2040, from 400 billion cubic meters (bcm) now to more than 600 bcm, Yingying Zhou, director of LNG origination at Cheniere, said last week.
Cheniere expects China to become the world’s first market with 100 million tons of LNG demand very soon. LNG will represent about 25%-30% of China’s total natural gas demand, the executive added.
China, which has surpassed Japan in recent years to become the world’s largest LNG importer, will be a key growth driver of global LNG demand growth, industry analysts and major LNG traders say.
By Tsvetana Paraskova for Oilprice.com
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The post Cheniere Energy Q3 Earnings Dip on Lower LNG and Gas Prices appeared first on Energy News Beat.
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