A fire broke out Wednesday after an explosion at Freeport LNG in Texas, one of the largest LNG export terminals in the United States.
According to a spokesperson, the terminal, which sends large quantities of LNG to Europe, will be closed for at least three weeks, according to a spokesperson.
On Thursday morning, European gas futures, which are traded in Amsterdam, will rise by more than ten percent. At most, prices rose by 13 percent right after trading opened.
According to Bloomberg, nearly a fifth of US gas shipments were sent abroad through this terminal last month. Much goes to Europe, where the European Union wants to become less dependent on Russian gas and is working on alternatives. Among the alternatives, there are a much larger number of terminals for receiving LNG.
Freeport is one of eight US LNG export terminals. Terminals receive gas through pipelines on the continent and make it a liquid by cooling it, before loading it onto ships specially designed to keep the gas extremely cold and liquid.
The United States sent nearly three-quarters of its LNG to Europe during the first four months of the year.
Gas prices in Europe fell on Wednesday to three-month lows, in part due to expectations that more gas will come from the United States.
On the other hand, US gas prices with deliveries next month have fallen since the fire broke out. The explanation is that the shutdown will reduce exports and may provide a somewhat higher supply in the United States if the plant does not absorb the same amount of gas.
“This is a major shutdown of production at a large US facility,” Alex Munton, director of global gas and liquefied natural gas at research firm Rapidan Energy, told Reuters.
According to him, four loads of LNG leave Freeport every week. Thus, a three-week shutdown would take at least one million tons of LNG off the market.
It would mean one thing: scarcity. Monton told the news agency that competition for spot LNG will drive up global LNG prices.
At full capacity, the plant can export 15 million tons annually. The United States, along with Australia and Qatar, is one of the world’s largest LNG exporters.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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