U.S. LNG exports dip in October, more cargoes head to Asia

By Marianna Parraga

HOUSTON (Reuters) – U.S. exports of liquefied (LNG) in October remained capped by plant outages, with producers shifting more cargoes to Asian buyers last month, according to Refinitiv Eikon tanker monitoring data, after of a pipeline leak cut supplies from Malaysia.

LNG prices recently have cooled with Europe’s gas storage levels rising to over 90% of target capacity and a slow start to winter.

In Asia, however, a declaration of force majeure on gas supplies by Malaysian state-energy company Petronas has LNG customers in Japan scrambling for alternative cargoes. Malaysia was the second biggest supplier of LNG to Japan in 2021.

A total of 88 tankers carrying 6.27 million tonnes of LNG departed in October from U.S. ports, mostly heading to Europe, the data showed. The share of sales to Asian customers rose to 24% from 19% the previous month, while shipments to Latin America and the Caribbean dropped to a couple cargoes.

The export volume was just below September’s 6.32 million tonnes.

Prices at the Dutch hub this week fell to $27 per million British thermal units as high inventory levels and above-normal temperatures pushed European gas prices to their lowest since June.

“Europe has enough gas stored to survive this winter unless it gets very, very cold,” said analyst Nikoline Bromander from consultancy Rystad Energy in a note to clients last week.

About a dozen ships carrying LNG remained anchored last week off Spain’s Bay of Cadiz (NASDAQ:) in anticipation of a rise in European gas prices as plants that convert the superchilled fuel back to gas were operating at maximum capacity.

U.S. LNG producers this year cranked up exports to Europe following Russia’s invasion of Ukraine, but plant outages and the shutdown of the second-largest U.S. export facility have capped additional volumes.

An explosion in June forced the shutdown of Freeport LNG’s 2.1 billion cubic-feet-per-day Quintana, Texas, processing plant. The company expects to return to partial service in November amid a regulator’s call for additional information before any restart.

The shutdown of the second-largest U.S. LNG export plant has hit many customers, including Japan’s biggest LNG buyer, JERA, which last week said it will book a $751-million loss mostly due to higher purchase costs.

But the No. 3 export plant in the country, the Cove Point LNG facility in Maryland, completed its planned maintenance and returned to service in October, adding 700 million cubic feet per day (MMcfd) to exports. U.S. gas storage levels rose to 3.34 trillion cubic feet last week.

“2.7 Bcfd of natural gas which was usually exported as LNG has instead directed into the local market since June and late September respectively,” Bromander added.

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