Freeport LNG ramps up after brief spell of maintenance as six US export plants maximise supply to buyers
Freeport LNG returned a liquefaction Train to service after a brief spell of maintenance, increasing feed-gas demand at the Quintana Island plant in Texas and guaranteeing cargoes for Asian and European buyers..
The ramp-up of the Train at the three-Train Freeport facility came as spot LNG prices for North Asia jumped to $18.46 per million British thermal units for October from $17.240 per MMBtu last week.
US Gulf Coast LNG last day futures prices also soared on the week with the October US GCL free-on-board (FOB) cargo quoted at $16.900 per MMBtu versus the previous week's $15.199 per MMBtu.
With the Freeport Train back on stream, data showed that feed-gas deliveries to the Texas plant increased to just over 2 billion cubic feet per day.
Analysts note that high demand for US LNG from nations like China, Japan and South Korea as well as Brazil in South America has meant very high utilization rates at all six US liquefaction terminals.
The Freeport operating company, whose Chief Executive is the energy entrepreneur Michael Smith, produces around 15 million tonnes per annum of LNG, the equivalent of 130 million barrels of oil.
The Freeport business is now estimated to be on track to book well over $2.5 billion in revenue in 2021 because of higher prices, including the US benchmark Henry Hub over $4 per million British thermal units.
It has use-or-pay liquefaction tolling agreements for most of the output from the three Trains with customers including European and Japanese contract holders, BP of the UK, Germany’s Uniper and Japan’s Jera Co. Inc. and Osaka Gas.
The Freeport plant, which is the only plant in the US that uses exclusively electric motors instead of natural gas turbines to drive the liquefaction compressors, also has permits to develop a fourth processing Train.
The first three Trains were built by a consortium including McDermott International and Zachry Construction Corp. of the US, along with Chiyoda Corp. of Japan.
Freeport only began commercial operations in May 2020 for its third Train with liquefaction services for French major TotalEnergies and South Korean utility and energy company SK E&S under their tolling agreements.
The original Freeport facility was completed as an import terminal in 2008 with one berth and two storage tanks, each of 160,000 cubic metres capacity.
A second loading berth and 165,000 cubic metres capacity of storage were added.
North Asia LNG spot prices soar along with European benchmarks and point to winter market supply crunch
Liquefied natural gas prices for deliveries to China, Japan and South Korea soared to more than $20 per million British thermal units for November amid a rise in cargo liftings at global liquefaction plants as record prices in Europe pointed to a possible winter supply crunch.
Chinese LNG importer and oil major CNOOC plans fast-track development of new field in Bohai Sea
China National Offshore Oil Corp., one of China’s main LNG importers, said its newly discovered Bozhong 13-2 oil and natural gas field in the Bohai Sea offshore northeast China could prove to be one of nation’s largest resource basins and will be subject to fast-track development.
October shipments
Sept 28 (LNGJ) - As Asian and European natural gas prices and LNG values recover for the impending winter season, scores of October cargoes were en route to a variety of destinations. Among them, the 216,000 cubic metres capacity carrier “Al Thumama” is scheduled to deliver a cargo on October 3 to the Dahej terminal in India from Ras Laffan in Qatar. The 217,000 cubic metres capacity vessel “Al Shamal” will unload a Qatargas shipment on October 5 at the Map Ta Phut terminal in Thailand. Asian spot LNG cargo prices were last quoted for November at $4.975 per million British thermal units.
In European deliveries, the 160,000 cubic metres capacity “Arctic Aurora” will berth on October 7 at the Klaipeda facility on the Baltic Coast of Lithuania with a shipment from the US Freeport plant in Texas. The 155,000 cubic metres capacity carrier “British Sapphire” is scheduled to discharge a cargo on October 7 at the UK Isle of Grain terminal in Kent from the Trinidad plant at Point Fortin in the Caribbean. The UK National Balancing Point price was last at the equivalent of $4.10 per MMBtu.
Oil and natural gas futures and options hit record with Asia adding deep 24-hour liquidity
CME Group, the world's leading derivatives market, reported an all-time daily volume record for oil and natural gas futures and options after markets plunged under the weight of the economic effects of the coronavirus and an oil price war, with trading levels in energy futures high in Asia after the US close.
CME said the record of 6.8 million contracts was set on March 9 and surpassed the previous record of 6.2M recorded on September 16, 2019 after the attacks from Yemen on Saudi oil installations.
The futures and options surge came the day after North Sea Brent crude dropped by its biggest margin in 30 years in such a short time span from almost $50 per barrel to $33.56 as Organization of Petroleum Exporting Countries (OPEC) and Russia failed to agree production cuts.
However, oil and gas and stock markets staged solid rebounds on March 10 and March 11 after the previous day’s tumble on signs of co-ordinated action by the world’s biggest economies to counter the economic impacts of the coronavirus epidemic.
The biggest CME traded volumes on March 9 were in Crude Oil futures, Henry Hub Natural Gas futures, New York Harbor Ultra Low Sulfur Diesel (ULSD), RBOB Gasoline Futures and Brent Last Day Financial Futures.
Eighth on the CME traded list was the Natural Gas European Option.
The CME’s LNG futures are all relatively new and did not make the list as they were only launched within the past six months.
The CME, which is the former Chicago Mercantile Exchange, introduced its LNG freight futures on December 23, 2019.
The trading and settlement platform had previously launched a futures contract in October 2019 for LNG linked to physically delivered volumes from Cheniere’s Sabine Pass plant.
CME noted that its West Texas Intermediate Light Sweet Crude Oil futures and options also reached a record 4.8M contracts on March 9, surpassing the previous record of 4.3M contracts traded on September 16, 2019.
“Amid global economic uncertainty, market participants around the world continue to turn to CME Group's energy futures and options for managing their risk,” said Peter Keavey, CME Group Global Head of Energy.
“In particular, our benchmark energy products have experienced high volumes outside of US market hours, demonstrating deep liquidity and flexibility around the clock,” added Keavey.
LNG prices under long-term supply contracts are expected to be lower during the next earnings reporting season by the oil and gas majors as Asian natural gas utilities benefit from lower prices.
In US natural gas, the New York Mercantile Exchange front-month future rose again to $1.93 per million British thermal units and the Henry Hub day-ahead price was higher at $1.85 per MMBtu.
The Platts Japan-Korea Marker price for Asian spot LNG was last at $3.115 per MMBtu for April cargoes.
The main European LNG price indicators rose by around 15 US cents per MMBtu.
The UK National Balancing Point price that guides LNG prices for the Atlantic Basin was last at $3.00 per MMBtu, up from $2.85 per MMBtu and the main natural gas price on Continental Europe, the Dutch Title Transfer Facility (TTF), was also at $3.00 per MMBtu.
The US Gulf Coast LNG prices from the Intercontinental Exchange, dropped during the past week become of the market glut.
The front-month April 2020 price rallied to $2.401 per MMBtu from $2.390 per MMBtu.
The May LNG future was at $2.451 per MMBtu, up from a previous $2.449 per MMBtu.
The US GC LNG future traded on ICE is a settled derivatives contract available through to April 2022 and based on the average free-on-board (FOB) Gulf Coast LNG price.
