Record global gas prices, now trading as high as $100/MMBtu in onshore European markets, are putting pressure on US LNG export terminals to step up production, pushing feedgas demand this week to its highest since early July.
On Aug. 25, total gas demand from US export terminals edged up to over 11.5 Bcf/d, marking its highest level since July 1. The single-day demand high is no fluke -- over the past week, feedgas demand has trended just shy of that level, averaging nearly 11.2 Bcf/d, data from Platts Analytics shows.
The continued ramp up of production at Venture Global's Calcasieu Pass terminal has been a key driver behind recent gains in US liquefaction activity, with flows to the still-commissioning 10 million mt/year terminal estimated at a record-high 1.6 Bcf/d on Aug. 26.
While the June 8 shut-in of production at Freeport LNG cut US export capacity by some 2 Bcf/d, or about 15%, this summer, the US' other six operational terminals are making a push to maximize output -- and for good reason.
On Aug. 26, spot LNG import prices in Northwest Europe surged to their highest on record for the third consecutive day, this time hitting $74.49/MMBtu. In East Asia, Platts benchmark JKM import price climbed to over $71/MMBtu on Aug. 25, before easing back to the mid-$66 range on Aug. 26. At current levels, JKM prices are at their highest since the single-day price of $84.76 was recorded in early March, data from S&P Global Commodity Insights shows.
In the US market, the Platts Gulf Coast Marker for FOB cargoes loading 30-60 days forward was assessed at $73.35/MMBtu Aug. 26, up $6.10/MMBtu on the day to a new high.
Uncertainty in Europe
The run up in global prices, which have surged this week, comes as the European gas market grapples with growing supply uncertainty. Most recently, Norwegian transmission system operator, Gassco, advised European end-users of a planned maintenance on the Karsto, Oseberg and Kristin gas assets, from Aug. 26- Sept. 7, Platts reported previously. The maintenance cuts Norwegian pipeline supply to Europe by some 23.5 million cu m/d, or about 800 MMcf/d.
The ongoing pipeline maintenance adds to European consumers' angst over the prolonged shut-in of production at Freeport LNG, announced Aug. 23. The unexpected, month-long delay pushes back the timeline for the Texas export terminal's restart to early- to mid-November, keeping offline about 2 Bcf/d in US export capacity until Europe's winter heating season is already well underway.
European dependence on global suppliers like Freeport LNG is at a fever pitch ahead of this winter as Russia, among the continent's largest suppliers, ratchets down flows on the key Nord Stream pipeline to just 20% of capacity with a planned three-day maintenance expected to cutoff flows entirely starting Aug. 31, Platts reported previously.