Global consumption would see another rising energy crisis as Freeport LNG, one of the largest U.S. LNG export plants 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.
Freeport LNG produces around 20% of the U.S. LNG processing
U.S. natural gas futures sank following the report of the explosion as traders anticipated that the shutdown would reduce domestic demand.
“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.