Gas deliveries to LNG plants in the US hit a new record. In the Gulf of Mexico, the Freeport LNG terminal, which stopped last June due to a fire, is restoring work. The first cargo went to Asia, where quotes became more attractive than in Europe.
According to RonhEnergy, on February 14, gas supplies to LNG plants reached an all-time high. During the day, 371 million cubic meters were delivered to the terminals. Previously, the record was 362 million cubic meters, which was set on May 25, 2022. Just on the eve of the June fire that disabled the large Freeport LNG plant with a capacity of 56 million cubic meters per day.
After that, U.S. LNG exports dipped, but rebounded a few months later as other producers ramped up capacity. The launch of the terminal itself after repairs was postponed many times, including due to new regulatory requirements, and the restart began in the first half of February.
According to RonhEnergy data, on February 14, Freeport LNG began receiving gas at a third of its capacity – 19 million cubic meters per day. Two tankers have already loaded at the terminal. Kmarin Diamond is heading for the Suez Canal and Prism Agility is heading for the Panama Canal. Obviously, both tankers go to Asia, where LNG spot prices have become attractive to traders. Thus, LNG quotes for North-West and South-West Europe fell to $540 per thousand cubic meters, and in Asia they are at the level of $635. So far, these are equilibrium prices, since the way to Asia is more expensive due to the distance.
Also for loading at the Freeport LNG terminal was the LNG Rosenrot tanker, which is on charter with the German Uniper. Germany’s largest gas importer has a long-term contract with Freeport LNG for 0.9 million tons (1.2 billion cubic meters) per year.
After the terminal is fully restored, the total supply of US LNG abroad may exceed 400 million cubic meters per day, and Freeport LNG will account for about 15% of exports.
According to the US Department of Energy Information Administration (EIA) as of December 2022, no other launches of LNG terminals are planned in 2023.
The International Energy Agency (IEA) stated that this year Europe could experience a shortage of up to 57 billion cubic meters of gas. Among the reasons – the recovery of demand in China and the growth of imports by 21 billion cubic meters. These volumes will just be able to compensate for the return of Freeport LNG to the market.
The IEA urges EU countries to save gas even more, however, as the European Commission’s economic forecast says, demand for fuel can only grow. Due to lower prices, enterprises can increase consumption, which became the main force that saved EU gas due to production shutdowns or capacity cuts.
