Gas Supply Uncertainty At Fever Pitch in Europe

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Record global gas prices, now trading as high as $100/MMBtu in onshore European markets, are putting pressure on US LNG export terminals to step up production, pushing feedgas demand this week to its highest since early July, reports SP Global.

Increased production

The continued ramp up of production at Venture Global’s Calcasieu Pass terminal has been a key driver behind recent gains in US liquefaction activity, with flows to the still-commissioning 10 million mt/year terminal estimated at a record-high 1.6 Bcf/d on Aug. 26.

While the June 8 shut-in of production at Freeport LNG cut US export capacity by some 2 Bcf/d, or about 15%, this summer, the US’ other six operational terminals are making a push to maximize output — and for good reason.

Uncertainty in Europe

The run up in global prices, which have surged this week, comes as the European gas market grapples with growing supply uncertainty. Most recently, Norwegian transmission system operator, Gassco, advised European end-users of a planned maintenance on the Karsto, Oseberg and Kristin gas assets, from Aug. 26- Sept. 7, Platts reported previously. The maintenance cuts Norwegian pipeline supply to Europe by some 23.5 million cu m/d, or about 800 MMcf/d.

The ongoing pipeline maintenance adds to European consumers’ angst over the prolonged shut-in of production at Freeport LNG, announced Aug. 23. The unexpected, month-long delay pushes back the timeline for the Texas export terminal’s restart to early- to mid-November, keeping offline about 2 Bcf/d in US export capacity until Europe’s winter heating season is already well underway.

European dependence on global suppliers like Freeport LNG is at a fever pitch ahead of this winter as Russia, among the continent’s largest suppliers, ratchets down flows on the key Nord Stream pipeline to just 20% of capacity with a planned three-day maintenance expected to cutoff flows entirely starting Aug. 31, Platts reported previously.

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Source: SP Global

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