Volatile LNG markets bit Cheniere in 2021
Volatile global gas and LNG markets – soaring commodity prices and cancelled cargoes in 2020, when Covid-19 destroyed demand – hit US LNG developer Cheniere Energy squarely on the bottom line in 2021, contributing to net losses of $1.3bn in Q4 and $2.3bn for the full year, it said February 24.
Consolidated adjusted EBITDA, however, was strong, increasing 27% year-on-year for Q4, to $1.39bn, and 23% for the full year, to $4.9bn from $3.9bn in 2020.
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Derivative losses resulting from changes in fair value in 2021 amounted to $5.8bn, with another impairment of $969mn related to the “non-recurrence of revenues recognised from cancelled cargoes during the full year 2020,” Cheniere said. Derivative losses in Q4 amounted to about $1.3bn, but the losses in both periods were partially offset by increased volumes and margins of LNG delivered.
“While operationally we seek to eliminate commodity risk by utilising derivatives to mitigate price volatility for commodities procured or sold over a period of time, as a result of the significant appreciation in forward international LNG commodity curves during the fourth quarter and full year 2021, we incurred $600mn and $4.5bn, respectively, of non-cash unfavorable changes in fair value attributed to positions indexed to such prices,” Cheniere said.
Still, CEO Jack Fusco said 2021 remained a “defining year” for the company, marked by the realisation of its nine-train liquefaction platform across its Sabine Pass and Corpus Christi export terminals in Louisiana and Texas.
“Our 2021 financial results are the product of a relentless focus on execution throughout the Cheniere organisation and a fundamentally strong global LNG market,” he said.
Throughout 2021, Cheniere exported 566 cargoes representing 2,018 trillion Btu of LNG, up about 45% from 2020, while in Q4, 153 cargoes representing 542 trillion Btu of LNG were exported, an increase of 18% for both metrics compared to Q4 2020.