Algeria's History With The US LNG Market

Algeria, the country that first developed liquefied natural gas (LNG) for export in 1964, has long found the US LNG market interesting, and in the past has supplied up to 15 percent of the US LNG demand at three terminals: Cove Point, MD; Everett, MA; and Lake Charles, LA. In 2006, four-percent of Sontrach’s LNG exports went to the United States. But pricing has been a challenge to long-term supply deals, and untenable contract demands by Sonatrach resulted in the closure of Cove Point in 1980 for several years. The development of higher-value spot markets around the globe in the last half-decade allowed Sonatrach to take advantage of arbitrage opportunities in Japan where prices exceeded the US Henry Hub index, to utilize closer terminals in Europe and Turkey as long-voyage shipping costs escalated, and to explore new markets in China and India, resulting in no Algerian landings of LNG to the US since September 2007. It appears US companies have never lifted Algerian LNG, but rather, Sonatrach has supplied the LNG directly to terminal operators or to foreign-based International Oil Companies (IOC) with operating or supply contracts such as Statoil.