"We knew U.S. LNG imports would fall short of 2007 volumes when we saw delays in new production and demand rising in Europe and Asia," says Steve Johnson, president of Waterborne Energy, a Houston-based consulting group that specializes in LNG markets.

According to Johnson, drought conditions in Spain, a prolonged nuclear shut down in Japan and increased demand for LNG in power demand have changed market dynamics.

"When demand increases and supplies remain flat, the U.S. is the first to come up short," says Johnson. "The U.S. serves as the 'sump' for excess supplies of LNG and is the only country whose imports are largely driven by profit and not necessity. So, product we expected here is now being sold to the highest bidders in Asia and Europe."

Industry observers were hoping for another record year of U.S. LNG imports based on 50 bcf per month of new production that was expected to hit the market earlier this year.

"Delays at projects in Norway, Qatar, Nigeria, Australia, Russia and Yemen resulted in short supplies," says Johnson.

Still optimistic, Johnson expects a recovery for U.S. LNG imports next year, if planned new production of 72 bcf. per month comes online.

"The more LNG that comes online prior to next summer, the bigger the impact on U.S. import volumes. We could see volumes in excess of 2007 levels of 770 bcf."

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