GCM Rises After High Tanker Rates Fuel Swings


  • Feedgas falls, then rebounds, amid Freeport outage
  • Longer route to Asia via Cape of Good Hope eyed

Shifting production levels at home, shipping rates at sea and activity in destination markets spurred back and forth movement during the week of Nov. 2-9 for the export value for LNG cargoes loading on the US Gulf Coast 30-60 days forward, says an article published on their S&P global website. 

Continued bullishness

Reflecting the continued bullishness in the latest market fundamentals, commercial activity among US exporters and developers surged during the week.

The Platts-assessed Gulf Coast Marker ended the week at $22/MMBtu on Nov. 9, up 25 cents/MMBtu from $21.75/MMBtu on Nov. 2. The GCM reached as high as $25/MMBtu on Nov. 3, after falling below $20/MMBtu during the previous week for the first time in a month and a half.

Feedgas demand goes down

Total US feedgas demand was down sharply toward the beginning of the week at about 10 Bcf/d on Nov. 3, largely due to an outage at Freeport LNG involving a pre-treatment train, before rebounding at the end of the week to around 11.1 Bcf/d on Nov. 9 as repairs at the Texas facility continued, Platts Analytics data showed. 

The operator expects full production to resume around Nov. 20. Ongoing commissioning of a sixth train at Cheniere Energy’s Sabine Pass in Louisiana was supportive of overall US flows.

Waiting times at the Panama Canal Maximum waiting times at the Panama Canal for unreserved LNG tankers rose sharply during the week, topping out at 18 days northbound and 18 days southbound as of Nov. 9, according to the Panama Canal Authority.

As a result of the added congestion, more LNG volumes from the US Gulf Coast headed to Far East were expected to travel eastward around the Cape of Good Hope, rather than the shorter distance through the Panama Canal, an Atlantic-based LNG trader said. 

For Mediterranean cargoes, the Suez Canal was being viewed as the best bet in the near-term, the trader said.

Offtake commitments

Offtake commitments that China’s Sinopec and its trading arm, Unipec, have made to buy LNG from Venture Global LNG have been increased to at least 7.5 million mt/year, according to statements the two companies issued Nov. 4. 

When the purchases take effect, Venture Global would overtake Cheniere as the biggest US supplier of LNG to Chinese counterparties on a term basis.

On Nov. 5, Cheniere said China’s Sinochem had agreed to buy as much as 1.8 million mt/year of LNG from the US exporter under a long-term deal. That followed Cheniere’s announcement Oct. 11 that a subsidiary of China’s ENN Natural Gas had signed a 13-year deal to buy 900,000 mt/year of LNG, starting in July 2022, from the US exporter. 

Cheniere previously signed two long-term contracts with PetroChina for a combined 1.2 million mt/year of LNG. Only a small portion is in effect, with shipments on the balance starting in 2023.

Japanese utilities link new LNG term contracts

Elsewhere, during a presentation to an LNG conference in Louisiana on Nov. 3, a Tokyo Gas executive said the Japanese utility was considering linking new LNG term contracts to European and US gas hubs as it further diversifies its global supply.

The utility is interested in short- and medium-term supply deals, in addition to the long-term contracts for LNG volumes it currently has with producers in six countries, including the US, Atsunori Takeuchi, senior general manager of LNG optimization and trading, said in a video address to the World LNG & Gas Series Americas Summit & Exhibition in Lake Charles.

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Source: S&P global 



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