Fire at Key US Gas Export Terminal Hurts Fuel-Starved Europe
Freeport LNG issues force majeure to buyers for rest of June
Terminal handled almost a fifth of LNG exports from US in May
Current Time 0:00/Duration 0:00Loaded: 0%Progress: 0% Fire at Texas LNG Terminal Sends Prices FallingWATCH: A fire breaks out at a Texas LNG terminal.Source: Bloomberg
An explosion at a Texas liquefied natural gas plant will cut exports for weeks, briefly lowering prices for the fuel in the US while boosting them in Europe.
The Freeport LNG export facility will remain closed for at least three weeks after a fire on Wednesday, a company spokesperson said. It issued a force majeure to buyers with shipments scheduled till at least June 30, according to traders with knowledge of the matter. Almost one-fifth of all overseas shipments of gas from the US went via the terminal last month.
The US sent nearly three-quarters of its LNG to Europe in the first four months of the year, with the region now getting almost half of its LNG supplies from across the Atlantic. Some European countries have been attempting to wean themselves off Russian gas due to the invasion of Ukraine, but remain dependent on it in the short term.
The outage will reduce supplies available to Europe and Asia while routing more shale gas into US storage caverns. US gas futures fell as much as 7.9% early Thursday before reversing losses. July futures settled 3% higher to $8.963 per million British thermal units amid renewed concerns about tight domestic inventories as a heatwave across the southern states ramps up power demand. Dutch futures rose 6% to the equivalent of $26.43 per million Btu.
The Texas outage is also coinciding with the start of the northern hemisphere summer, when increased use of air conditioners boosts demand from electricity generators.
The US is one of the world’s top LNG exporters, along with Australia and Qatar. The Freeport plant, which has the capacity to ship about 15 million tons per year, supplies gas to BP Plc and TotalEnergies SE in Europe, as well as Japan’s Jera Co. and Osaka Gas Co., and SK E&S Co. in South Korea.
