US cuts LNG supplies to Europe due to rising domestic prices
The drop in LNG shipments to US gas export terminals was due to suppliers opting to sell volumes in the US itself – when prices rose to a three-year high due to an Arctic storm.
“Rising U.S. natural gas prices have prompted several tolling contract investors to cancel U.S. LNG export volumes from the U.S., opting instead to sell into the higher-priced domestic market,” S&P Platts wrote.
An Arctic storm hit the U.S. last weekend and the country’s shale and coalbed methane production fell 10%. At the same time, prices on the Henry Hub exchange doubled to $ 264 per thousand cubic meters. In this situation, it became profitable for suppliers, who independently buy gas and liquefy it for a separate fixed fee, to abandon LNG exports and sell the fuel within the states themselves.
Analysts from Northwest Europe expect the cancellations to amount to as many as 15 shipments – up to 1.5 billion cubic meters.
U.S. LNG plants, which have been the main suppliers of liquefied natural gas to Europe since last year, are struggling to restore production after the Arctic storm and freezing temperatures. While gas deliveries to LNG terminals exceeded 500 million cubic meters per day before January 25, they fell to almost 300 million cubic meters in the next two days. However, as RonhEnergy data shows, the situation is improving. Thus, on January 27, gas deliveries to LNG plants rose to 461 million cubic meters, and on January 28 – to 484 million cubic meters per day.
