Page 15 - GLNG Week 03 2021

GLNG AMERICAS GLNG

Panama Canal congestion

contributes to LNG price spike

PERFORMANCE CONGESTION in the Panama Canal delaying The authority told Reuters that it had changed
shipments of LNG from the US Gulf Coast to its transit reservation system on January 4 to ease
Asia is among the factors contributing to record- the bottleneck and allow LNG vessels to reserve
high spot prices for the super-chilled fuel in two slots 10-15 days ahead of transit, rather than
Northeast Asia. just one. It has also introduced auctions to sell
Other significant contributors include cold- off any slot that becomes available within 2-3
er-than-expected winter weather, a shortage days before transit owing to last-minute can-
of LNG carriers and supply outages at some cellations. On January 14, the authority said five
liquefaction plants around the world. The Pan- auctions had been conducted to date, and four
ama Canal congestion could last until March, slots awarded to LNG carriers.
according to traders cited by Reuters, and the A trip from the US to Asia via the Panama
weather is anticipated to start improving around Canal, which connects the Atlantic and Pacific
then too. This has already led to LNG spot prices oceans, can take around 15 days according to
for March delivery trading at less than half the Reuters. The alternative is to sail around the Cape
average price of cargoes due to be delivered in of Good Hope in South Africa, but that route
February. more than doubles journey time to around 38
The congestion comes despite the canal’s days. Given the higher costs of longer journeys,
regulator, the Panama Canal Authority, saying LNG vessels would be expected to avoid this
it had made changes designed to speed up tran- option. However, Energy Aspects has estimated
sit through the waterway. Reuters reported that that around one third of LNG carriers loading
LNG carriers had to wait for up to two weeks to from the US took the long route in December,
transit the canal in December, but that the wait illustrating how strong Asian demand for LNG
had now halved to one week. had become.™

Tellurian hopes to start Driftwood

construction this summer

PROJECTS & US LNG developer Tellurian is hoping to begin was quoted by Reuters as saying.
COMPANIES construction on its proposed Driftwood LNG Driftwood LNG has already been hit by
terminal in Louisiana this summer, even though delays, and Tellurian postponed an FID last year
a final investment decision (FID) has not been after the coronavirus (COVID-19) pandemic
made on the project yet. Tellurian’s co-founder depressed demand for LNG, exacerbating an
and executive chairman, Charif Souki, was cited existing market oversupply. The company subse-
by Reuters as saying last week that starting con- quently redesigned the first phase of the project
struction in the summer was what the company in an effort to cut costs, deferring three out of
was now aiming for, thanks to rising demand for four planned pipelines aimed at supplying feed-
LNG. stock gas to the terminal. The application for the
Customer interest in offtake from Driftwood most costly of the deferred pipelines, Permian
had increased “pretty dramatically” over the past Global Access, was subsequently withdrawn
month, according to Souki. His comments come altogether, though Tellurian has said that it will
as LNG spot prices in Asia are spiking on cold hold another open season for capacity on the
winter weather driving up demand while some pipeline if market conditions rebound.
supply-side outages persist. This appears to be The redesigned first phase of Driftwood LNG
driving up interest in securing more stable long- would cost $16.8bn. If construction begins this
term supply as well. summer as hoped, the first phase would start
“There is a strong need for additional lique- up in 2025, producing about 16.5mn tonnes
faction capacity and we’re probably the project per year of LNG. Under current plans, capacity
that is the closest to starting construction,” Souki would eventually be expanded to 27.6mn tpy.™

Week 03 22•January•2021 www. NEWSBASE .com P15