Freeport LNG Extends Force Majeure Until September
Freeport LNG has declared a force majeure on LNG exports from its Gulf Coast location until September, Bloomberg sources said on Friday.
The company had reported earlier in the week that its Gulf Coast facility would be completely offline through September when it would operate in a partial capacity through the end of the year. It did not, however, specify a force majeure.
The original estimate for Freeport LNG’s outage was three weeks, but the estimate was quickly revised to span until September as the damage from a fire last week was assessed.
As a result, U.S. LNG exports are expected to remain subdued at least through September. This would keep more LNG for domestic use beyond what the market requires—a reality that has sent U.S. LNG prices down. On the other hand, Europe, starving for LNG imports from anywhere that isn’t Russia, has seen higher LNG prices as its U.S. prospects were dashed by the facility’s fire.
The Houston-based Freeport LNG facility accounts for 20% of all LNG processing in the United States, at 2.1 Bcf a day. It is the 7th?largest LNG facility in the world, and the United States’ 2nd?largest.
The impact of the Freeport LNG shutdown became even more significant this week after Russia cut its gas flows to Germany and Italy, with France not receiving any gas from Germany since Wednesday. What’s more, Russia’s Nord Stream 1 pipeline that carries gas from Russia to Europe will be down for weeks for regularly scheduled maintenance in July.
The outages and curtailments will force some European countries to burn some of the gas that it was trying to store for the upcoming winter season, although Germany said it would look to Norway and the Netherlands for additional gas supplies.
By Julianne Geiger for Oilprice.com
