Freeport LNG plant to shut for 3 weeks, roiling global energy markets
By Liz Hampton, Sabrina Valle and Scott DiSavino
HOUSTON (Reuters) -Freeport LNG, operator of one of many largest U.S. export crops producing liquefied pure fuel (LNG), will shut for at the least three weeks following an explosion at its Texas Gulf Coast facility.
The fireplace roiled U.S. pure fuel markets on Wednesday and the influence is prone to unfold by way of Europe and Asia markets, analysts stated.
Freeport LNG, which supplies round 20% of U.S. LNG processing, disclosed the shutdown late on Wednesday after appraising harm to the huge facility.
Its closure takes away a significant provider to markets already strained by European consumers shunning Russian LNG over its invasion of Ukraine – actions that Moscow calls a “particular operation” – and by resurgent demand in China, analysts stated.
“This can be a vital manufacturing outage at a significant U.S facility,” stated Alex Munton, director of world fuel and LNG at analysis agency Rapidan Vitality. Freeport LNG ships about 4 cargoes per week and a three-week shutdown will take at the least 1 million tonnes of LNG off the market, he stated.
“It will imply one factor: shortages. The competitors for spot LNG goes to drive world LNG costs larger,” Munton stated.
The plant can course of as much as 2.1 billion cubic ft of pure fuel per day (bcfd), and at full capability can export 15 million tonnes each year (MTPA) of the liquid fuel. U.S. LNG exports hit a document 9.7 bcfd final yr, in line with the U.S. Vitality Info Administration (EIA).
In March, 21 cargoes loaded on the Freeport facility, carrying an estimated 64 billion cubic ft of fuel to locations in Europe, South Korea and China, in line with the U.S. Division of Vitality. That is up from 15 cargoes in February and 19 in January.
U.S. pure fuel futures sank following information of the explosion on issues it may disrupt the plant’s demand for fuel. They closed down about 6% at $8.699 per million British thermal models (mmBtu), having hit a close to 14-year excessive of $9.664 mmBtu earlier within the day.
Freeport LNG was based in 2002 by billionaire Michael Smith, and processes fuel for firms together with BP, JERA, Kansai Electrical, Osaka Gasoline, SK E&S and TotalEnergies. It’s within the midst of increasing the plant’s capability to twenty MTPA.
An investigation into what prompted the explosion was underway, a spokesperson for the corporate stated, with out elaborating on the reason for the fireplace.
A consultant for the U.S. Coast Guard on Wednesday stated a safety zone had been arrange two miles east and west of Freeport LNG’s facility, closing that portion of the intracoastal waterway to vessel visitors.
(Reporting by Liz Hampton in Denver, Sabrina Valle in Houston and Scott DiSavino in New York; Modifying by Marguerita Choy, Richard Pullin, Chris Reese and Kenneth Maxwell)
