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Freeport LNG will not resume full operations at its liquefication plant on Quintana Island until the end of this year, according to the company’s Tuesday press release.
While China’s LNG demand may be calming the hot LNG market, news that Freeport LNG’s Texas plant will not resume full operations until late 2022 may upset the market.
“At this time, completion of all necessary repairs and a return to full plant operations is not expected until late 2022,” Freeport LNG said, adding that partial operations could be resumed within 90 days.
Houston-based Freeport LNG suffered an explosion on June 8, causing the plant to shut down to assess the damage and perform repairs. Freeport LNG accounts for 20% of the United States’ total LNG export capacity, capable of processing 2.1 Bcf of gas per day. According to Freeport LNG, it is the seventh-largest liquefication facility in the world and the second-largest in the United States.
But originally, it was set to be out of commission for just three weeks.
While LNG spot prices to Asia and Europe saw an increase at the news of the outage last week, the reaction was muted on soft Asian demand.
But news of a lengthy turnaround for restarting the export facility could send prices higher, particularly in light of Europe’s increased thirst for LNG as it tries to reduce its dependence on Russian gas while filling its storage before winter.
The EU and UK imported record volumes of LNG in April at 16.5 Bcf/d, according to the latest EIA data. This compares to the 2019 average of just 10.3 Bcf/d.
And Europe is planning to increase the number of LNG import facilities it has, particularly in Germany.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.