Huge US winter storm threatens to restrict LNG market
The massive and deadly winter storm sweeping across the United States could disrupt global supplies from a major exporter of liquefied natural gas (LNG), tightening a market that has seen wild price swings this year.
The arctic blast in the United States knocked out power to millions of homes and disrupted Christmas travel plans for millions more as thousands of flights cancelled. Just before the Christmas holiday weekend, almost 250 million Residents of the US and Canada were affected by the storm in one way or another, with at least 19 deaths related to the blast ice and severe winter conditions.
Hard frost warnings have been issued for all states along the US Gulf Coast: Texas, Louisiana, Alabama and Florida.
While the Texas power grid managed to avoid catastrophic failures during the storm, shipping agencies are warning there could be a disruption to shipping on the waterways that service the larger LNG export terminal at Sabine Pass.
Subzero temperatures through Monday, December 26, could delay or suspend pilot services for the Sabine-Neches Waterway that services Sabine Pass, according to Moran Shipping notices cited by Bloomberg. In addition, pilots have suspended docking ships at the Corpus Christi port in Texas due to extreme winter weather, Moran Shipping says. As a result, vessel traffic to the Corpus Christi LNG export facility could be affected.
The winter storm in the US over Christmas could be the last extreme event to affect the global LNG market this year.
Just last week, a fire at the Prelude floating LNG export facility off the coast of Australia forced the operator, Shell, to to disconnect production, just three months after Prelude resumed operations following a months-long industrial action on FLNG.
Australia is also one of the world’s top LNG exporters, along with the US and Qatar, but it has been US LNG that has helped Europe reach comfortable gas storage supply levels before this winter.
The United States has sent record volumes of LNG to Europe to help allies in the EU and around 70% of all American LNG exports have headed to Europe in recent months.
LNG prices hit records earlier this year as Europe scrambled to stock up on supercooled fuel before this winter. The EU’s incentive to shed reliance on Russian gas and replace volumes no longer supplied by Russia has made Europe the preferred destination for flexible-contract LNG cargoes, especially those from the United States.
Between January and November, LNG imports into the EU and UK combined increased by 65% year-on-year, according to Dear from the Oxford Institute of Energy Studies (OIES). Imports from the United States alone increased by 176%, while imports from other sources grew by 27%. In that same period, global LNG exports grew just 5.5%, with almost half of the growth coming from the United States, the OIES said.
Next year, Europe will need even more LNG supplies to make up for low (or possibly non-existent) pipeline flows from Russia, analysts and industry players say.
With gas deliveries from Russian pipelines falling, Europe will need “huge volumes” of LNG next year, commodities trader Trafigura said earlier this month, adding that it expects continued volatility in gas markets. natural and LNG.
“While Europe should avoid a blackout this winter by drawing on inventories and reducing demand, it will need to import large volumes of LNG in 2023 given the massive reduction in flows from Russia,” Trafigura said in its statement. annual report for the year to September 30.
Natural gas prices in Europe will need to remain high for the continent to continue to attract the majority of LNG cargoes in competition with the other key demand hubs, according to Trafigura. The commodities trader expects Europe to prioritize security of supply “through next winter and beyond.”
By Tsvetana Paraskova for Oilprice.com
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