The share prices of PTTEP, IVL, and BANPU are likely to increase today following Wednesday’s report of an explosion at the Freeport LNG natural gas plant in the United States.
Freeport LNG, one of the largest U.S. LNG export plants , announced on Wednesday that it will shut for at least three weeks after its Texas Gulf Coast facility exploded on Wednesday; analysts warn that the impact is likely to spread through Europe and Asia markets.
“This is a significant production outage at a major U.S facility,” said Alex Munton, director of global gas and LNG at research firm Rapidan Energy. He stated that Freeport LNG ships approximately four cargoes each week and that a three-week outage would remove at least one million tonnes of LNG from the market.
“It’s going to mean one thing: shortages. The competition for spot LNG is going to drive global LNG prices higher,” Munton added.
Energy prices in Europe surged by a fifth on Thursday, as traders worried that the loss of US gas exports could add to the pressure on the market already under pressure from a lack of supply from Russia.
Mr. Suwat Sinsadok, Managing Director of FSS International Investment Advisory (FSSIA), expects that, in the near future, natural gas prices in the United States will experience a limited impact; prices may fall as a result of an increase in production but an inability to export. Meantime, Europe will be the most directly affected region, as the bloc has reduced its reliance on Russian energy and increased its imports of gas from the United States. Gas prices in the Asian market are expected to climb slightly as most countries rely mostly on gas imports from Qatar and Australia.
FSSIA believes PTT Exploration and Production Pcl. (SET: PTTEP) will be the top gainer from the explosion at one of the world’s biggest suppliers US natural gas plants, followed by Indorama Ventures Pcl. (SET: IVL) and Banpu Pcl. (SET: BANPU).
The Freeport LNG explosion is likely to raise PTTEP’s gas selling prices, whereas IVL would profit from lower costs because it has many plants in the US and energy prices in the US are predicted to fall. In the meantime, BUNPU would benefit from oil hedging.
FSSIA has set a target price range of THB190.00-200.00 to PTTEP, THB70.00 to IVL, and THB18.00 to BANPU.