Shutdown at Freeport LNG, one of the largest export plants in the United States to produce liquefied natural gas (LNG), for at least three weeks anticipates cargo delays to Europe and phased out Russian gas I will further emphasize the motivation of the continent.
The shutdown of a plant that provides about 20% of US LNG processing capacity began on Wednesday with an explosion at the Texas Gulf facility. It warned among market players who are already suffering from a decline in Russia’s supply and a resurgence of demand in Asia.
The factory has historically sent most of its cargo to Japan and South Korea, but rising prices will affect Europe, which has pulled US cargo from the east. Russia’s invasion of Ukraine shifted the flow from Asia to Europe.
A three-week outage means a loss of up to 15 cargoes, but Europe should be able to compensate for the loss from gas storage. But if the shutdown lasts for a long time, the risk remains, analysts said.
Alex Froley, an LNG analyst at data intelligence company ICIS, said:
The outage is consistent with NordStream1 maintenance and some Norwegian gas maintenance measures. However, market savvy said that by pulling some volume out of storage, the market could handle it.
The news has plunged the US natural gas market as traders expected the outage to free supply and help rebuild US storage for winter demand.
In Europe, gas prices rose by up to one-fifth on Thursday morning, fearing that the loss of US shipments would put stress on markets already suffering from a decline in Russia’s supply. Prices chilled later in the day.