Cheniere Energy’s third-quarter profit fell as LNG and gas prices fell

The largest U.S. LNG exporter, Cheniere Energy Inc (NYSE: LNG), on Thursday reported lower third-quarter revenue and profit amid lower market volatility and lower international LNG and natural gas prices.

Cheniere Energy’s total revenue for the third quarter was $3.763 billion, compared to $4.159 billion in the same period last year. LNG revenues fell to $3.554 billion from $3.974 billion amid “significant reductions in historical international gas price volatility and moderate and resilient spot prices in current periods compared to the same periods in 2023,” the company said in a filing with the SEC.

Net income attributable to Cheniere fell by nearly half to $893 million from $1.7 billion a year earlier. The company attributed the decline to lower sales volumes under short-term contracts, as most of its LNG was sold under long-term contracts.

The decline in revenue was the result of lower international LNG and gas prices, as well as lower sales volumes under short-term agreements as a result of additional long-term agreements coming into effect after the third quarter of 2023, Cheniere Energy said. Part of the decline was due to lower prices at Henry Hub, the U.S. natural gas benchmark against which most of Cheniere’s long-term LNG sales contracts are indexed.

Lower LNG and natural gas prices and lower margins on LNG cargo delivered have put pressure on Cheniere’s earnings this year.

However, the company is optimistic about long-term demand for LNG, especially in Asia, which is a key driver of growth in LNG consumption worldwide.

China’s demand for natural gas will increase by more than 50% by 2040, from the current 400 billion cubic meters.

Cheniere expects China to very soon become the world’s first market with demand for 100 million tons of LNG. LNG will account for about 25-30% of China’s total natural gas demand, the executive added.

China, which has overtaken Japan in recent years to become the world’s largest importer of LNG, will be a key driver of growth in global LNG demand, industry analysts and major LNG traders say.

Tsvetana Paraskova for Oilprice.com

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