Freeport LNG announced force majeure for the export of liquefied natural gas from its location on the shores of the Persian Gulf until September, Bloomberg sources said on Friday.
The company announced earlier this week that its Gulf facility will be completely offline until September, when it will operate at partial capacity by the end of the year. However, he does not specify force majeure circumstances.
The initial estimate for the shutdown of Freeport LNG was three weeks, but the estimate was quickly revised to cover September, when fire damage was assessed last week.
As a result, US liquefied natural gas exports are expected to remain low until at least September. This will keep more liquefied natural gas for domestic use beyond what the market demands – a reality that has reduced LNG prices in the United States. On the other hand, Europe, starving for liquefied natural gas imports from anywhere other than Russia, has seen higher liquefied natural gas prices as its prospects for the United States have been shattered 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 per day. It is the 7th largest liquefied natural gas facility in the world and the second largest in the United States.
The impact of the shutdown on Freeport LNG became even more significant this week after Russia reduced its gas flows to Germany and Italy, with France not receiving gas from Germany since Wednesday. Moreover, Russia’s Nord Stream 1 gas pipeline, which carries gas from Russia to Europe, will be shut down for weeks for regular maintenance in July.
The interruptions and cuts will force some European countries to burn some of the gas they were trying to store for the upcoming winter season, although Germany has said it will seek additional gas supplies to Norway and the Netherlands.
By Julian Geiger for Oilprice.com
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