Freeport, one of the largest liquefied natural gas (LNG) facilities in the United States, will remain closed for at least three weeks after the LNG terminal in Texas explodes. This is a blow to Europe as the continent wants to import more US gas to reduce its dependence on Russian energy.
Why is this important?The gas market is under severe pressure from European gas buyers avoiding Russian LNG due to the Russian invasion of Ukraine and the recovery in demand in China.
Freeport LNG, which accounts for about 20 percent of LNG processing in the United States, announced a shutdown late Wednesday after determining massive facility damage. Those reports, among other things, were reported by Reuters and The Financial Times⁇
The plant can process 2.1 billion cubic feet of natural gas (PCFT) per day and can export 15 million tons (mtbA) of liquefied gas per year at full capacity. US LNG exports reached a record 9.7 PCFT last year US Energy Information Administration (EIA)
In March, the Freeport facility carried 21 ships, with an estimated 64 billion cubic feet of gas. Europe, South Korea and China. There were 15 loads in February and 19 in January.
“Indicates only one thing: scarcity”
“This is a major manufacturing failure in a major US company,” Alex Munden of research firm Robitan Energy told Reuters. It said Freeport LNG sends four loads a week and that a three-week shutdown would take at least 1 million tonnes of LNG from the market.
“It only means one thing: the shortage. The competition for spot LNG is going to push up LNG prices globally,” Mundon suggests.
On Wednesday, the fire particularly disturbed US natural gas markets. U.S. perspective contracts for natural gas supply in July traded at $ 8.17 per million British thermal units on Wednesday evening, down 12 percent from Tuesday’s settlement price. Traders thought that domestic stocks would get stuck in the landscape, he writes FT⁇
Many analysts predict that the effects could spread across European and Asian markets.
Deal with the EU
America wants this year Supply of at least 15 billion cubic meters of additional liquefied natural gas (LNG) to EU countriesThe pledge was made during a meeting between US President Joe Biden and European Commission President Ursula van der Leyen in late March.
Brussels said the year is on target Requirement for US LNG 50 billion cubic meters at the end of the decade, 4.8 billion cubic meters per day.
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Grant competition between Europe and America?
A subsidy competition between Europe and America?