Extended Freeport closure sparks concern over US LNG supplyExtended Freeport closure sparks concern over US LNG supply

The Freeport plant is important for consumers in Europe because it has played a significant role in replacing  supplies from Russia. The facility supplied more than 5% of Europe’s LNG in 2023, according to analysis from Oslo-based Rystad Energy.

European LNG demand for LNG is running high. Heatwaves in southern Europe have driven temperatures to more than 40°C in Greece and Italy, for example, and are stoking energy demand. The above-average temperatures are expected to last until early August.

LNG demand has also increased in Asia, again due to higher-than-average temperatures, Rystad noted. However, relatively high inventories in Japan, South Korea and China are likely to cushion the higher demand for the moment.

Meanwhile, off the coast of Texas, four LNG carriers were waiting to load at Freeport LNG yesterday, Rystad said, following a shutdown of the plant before Hurricane Beryl made landfall in Texas on July 7. Some equipment at the plant was damaged, according to a Freeport LNG announcement, and although one train is expected to resume production this week, restart of operations at the other two trains remains uncertain.

Although other US liquefaction facilities were largely unaffected by the hurricane, Freeport LNG’s longer-than-expected closure has restoked concern over global LNG supply risk, according to Rystad. The firm noted an increase of almost 5% in benchmark Title Transfer Facility (TTF) LNG prices in Europe last week and a 6.3% rise in Asian prices over the same period.

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The Freeport facility has been struck by a string of outages in recent years including a shutdown of nearly 10 months from mid-2022 following an explosion. Production losses of nine million tonnes in 2022, 2.9 million tonnes in 2023, and 3.2 million tonnes in the year to date have been logged.

Looking to the future, Rystad noted the importance of the upcoming US election which, it said, would set the stage for market changes in the coming years. Of particular note is a possible change to President Joe Biden’s strategy of halting new US LNG projects, the firm said.