- Following the shut-in at Freeport, though, forecasts previously calling for record-high US LNG export demand at over 13 Bcf/d in June, July and August, have since been revised downward.
- Japan is still in the midst of assessing the impact of the shutdown of Freeport LNG, including on shipping arrangements, a METI official said on June 14.
- The ship has been circulating between Freeport and Dunkerque in France in recent months.
If the tightening gas supply situation in light of the Russia-Ukraine conflict wasn’t enough to roil the LNG markets around the world, the closure of the Freeport LNG terminal in the United States is adding to buyers’ concerns, with prices expected to remain high in the coming weeks, according to sources as reported by S&P Global.
Facility remains shut
“The energy complex is very tight globally and LNG prices will be supported in the next two-three months at the very least,” a trading source based in Singapore said on June 13.
A fire at the Freeport LNG terminal on June 8 prompted an immediate shutdown of the facility’s three liquefaction trains.
In a statement issued later that day, the terminal operator said that the facility would remain shut for at least three weeks, with no further details on the cause of the incident.
In an email June 9 to reporters, a spokesperson for the terminal said Freeport LNG would have no comment about force majeure declaration matters, S&P Global Commodity Insights reported earlier.
“As a result, the shutdown of the Freeport LNG terminal might last for a long time.”
LNG prices elevated
While most of Freeport’s LNG exports make their way to Europe, Asia will not likely stay unperturbed by this supply shock, sources said.
From the start of January through end-May, Freeport LNG exported around 3.2 million mt of LNG to Europe, according to S&P Global data.
Because a significant percentage of US LNG was heading to Europe, these volumes will need to be replaced with other supplies which will limit the number of volumes heading from the Atlantic Basin into the Pacific and will likely prolong the current trend of European hub prices finding support above APAC spot LNG prices, Moore added.
Following the shut-in at Freeport, though, forecasts previously calling for record-high US LNG export demand at over 13 Bcf/d in June, July and August, have since been revised downward.
A second trading source echoed similar sentiments, saying that while “people were still trying to assess the impact of the Freeport outage”, about 13-15 cargoes would be off the market if the Freeport outage lasted for three weeks but if it dragged on, more cargoes would be wiped out and “that’s going to be very bullish for prices,” he said.
“We’re already in the middle of restocking in Asia and many buyers are likely to feel the increased need to buy amid fears of limited supply,” he added.
Japanese buyers may feel the pinch
In Japan, local power utilities are stockpiling LNG for the country’s summer season beginning in a few weeks, with the magnitude of the impact from the outage at the Texas facility to be felt from July onwards should the outage persist, market sources said.
Now, Japan is about to enter the peak demand season with a relatively high LNG inventory level.
The unladen Elisa Larus, part of the controlled LNG tanker fleet of JERA Global Markets — the trading arm of Japan’s largest power generation company JERA — has been anchoring outside the Freeport terminal since June 8, according to Platts cFlow ship and commodity tracking software from S&P Global.
The ship has been circulating between Freeport and Dunkerque in France in recent months.
A JERA spokesperson declined to comment on its LNG supply impact as well as position.
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Source: S&P Global
