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A fire at an LNG plant in Texas is driving up European gas prices

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A shutdown of at least three weeks at Freeport LNG – the operator of one of the largest US export plants producing liquefied natural gas (LNG) – is expected to delay shipments to Europe and further underscore the continent’s efforts to phase out Russian gas.

The outage at the facility, which provides about 20 percent of US LNG processing capacity, began Wednesday with an explosion at its facility on the Texas Gulf Coast. It has set off alarm bells among players in a market already grappling with reduced Russian supplies and a rebound in demand in Asia.

The plant has historically sent most of its freight to Japan and Korea, but the outage will affect Europe, which has been pulling US freight from the east because of higher prices. Russia’s invasion of Ukraine shifted flows from Asia to Europe.

A three-week shutdown means the loss of up to 15 cargoes, although Europe should be able to recoup its losses from gas storage. However, the risk remains if the shutdown is prolonged, analysts said.

“A failure of at least three weeks means a loss of around 940,000 tons of LNG. If you take an average cargo size of around 70,000 tons, that’s around 13 loads,” said Alex Froley, LNG analyst at data intelligence firm ICIS.

The outage coincides with maintenance of Nord Stream 1 and some Norwegian gas maintenance work. However, the market could potentially deal with it by pulling some volumes out of storage, a person familiar with the market said.

The news sent US natural gas markets lower as traders expected the outage would free up supplies and help rebuild US storage for winter demand.

In Europe, gas prices rose by as much as a fifth on Thursday morning amid fears lost US supplies would weigh on a market already grappling with reduced Russian supplies. Prices cooled off later in the day.

https://www.independent.ie/business/world/fire-at-texas-lng-plant-sends-european-gas-prices-higher-41738267.html A fire at an LNG plant in Texas is driving up European gas prices

Fry Electronics Team

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