South American LNG imports rebound in 2021
Amid the dynamics of the major global LNG demand centres in 2021, you could be forgiven for overlooking the South American demand market. South America had seen a large drop in imports (about 15%) across 2019-20 against the backdrop of increasing domestic gas production and a weak economic outlook. That has all changed this year with a severe drought in Brazil significantly reducing available hydropower output (which accounts for around 70% of Brazil’s power mix), and driving a year on year increase in LNG imports of 60%.
While South American demand is a small proportion of the global LNG demand, any increase in demand is pulling marginal Atlantic cargos away from the NW European sink (and its empty storages), contributing to the surge in European energy prices.