Page 8 - FSUOGM Week 24 2022

FSUOGM PERFORMANCE FSUOGM

European gas market takes hit

from Freeport LNG explosion

EUROPE AN explosion at the 15mn tonne per year (tpy) uncontracted spot volumes from larger export-
Freeport LNG export terminal in Texas that ing facilities including Sabine Pass, Corpus
The terminal will be occurred on June 8 may be bad news for Europe Christi and Cameron LNG could divert addi-
offline for weeks if not and its already very tight gas market, but it also tional supply to Europe.
longer. opens up opportunities for North and West The price at the Dutch TTF gas hub gained
African gas exporters to fill the void left from $1.5 per mmBtu to settle at $26 on news of the
the drop in US exports, Rystad Energy said in a Freeport LNG explosion and a further decline
research note on June 13. in Russian pipeline gas volumes. European gas
Freeport LNG, one of the largest sources of injection volumes have been strong this year,
US LNG exports, is due to remain shut for three amounting to 35.1bn cubic metres during the
weeks, and the downtime could be longer given first five months of the year, providing some
that the extent of the damage is yet to be deter- downward relief to prices. Gas injection in June
mined, Rystad said. The plant had been running averaged 477mn cubic metres per day, up 17%
at close to its capacity in recent months, help- compared to the same month last year. Overall
ing Europe offset recent disruptions in Russian volumes in storage amounted to 57.11 bcm on
supply. June 11.
Rystad notes that the bulk of Freeport LNG’s Rystad predicted that strong injection rates
output had been heading to Europe before the would continue during the summer, helping
incident – rising from 40% in March to close to fulfil the EU goal of having storage facilities at
60% in May. The plant has been able to quickly least 80% capacity by November 1, to safeguard
divert extra supply to Europe amid soaring against winter shortages.
prices and Moscow’s invasion thanks to the fact Russian supply to Europe has now fallen to
that most of its capacity is uncontracted. 170 mcm per day, Rystad said, which is close to
That also means Europe will be hardest hit the record low level seen at the start of 2022.
from the plant’s closure. Freeport LNG accounts “The main cause of the flow decline is less
for 10% of total import volumes into Europe, supplies via Ukraine … as one key transited gas
while overall US volumes account for 45% of delivery point at Sudzha did not receive redi-
the continent’s imports. Russia and Qatar each rected gas from Russia since the full stop of gas
account for a further 15%, while the remaining supplies via the Sokhranivka pipeline in early
third comes from Nigeria, Algeria, South Amer- May,” Rystad said.
ica and the Caribbean. Russia’s Nord Stream 1 pipeline to Germany
“While Freeport LNG is offline, it is unclear is due to undergo maintenance between July 11
which alternative volumes could replace the and 21.
drop in exports to Europe,” Rystad said. “How- “So far, the Nord Stream 1 supplies are the
ever, with favourable spot prices, countries such most stable route for Europe and the coming
as Nigeria and Algeria that are producing well 10-day maintenance work would mean a gas
below capacity could increase production to help supply loss of 1.55 bcm for Europe during the
fill the void.” summer, which would further tighten the Euro-
The Norwegian consultancy notes that US pean gas market,” Rystad said. ™

P8 www. NEWSBASE .com Week 24 15•June•2022