Impact of Freeport LNG Outage for US and Europe

Freeport LNG have extended the export terminal outage from “at least 3 weeks” with partial restart now expected in 90 days and full operations not expected until late 2022. US Natgas is now down 16.3% to 7.21$/mmbtu and TTF is up 14.5% to 95.5€/MWh. The volume of the partial restart is not yet known.

• The extended outage at Freeport LNG could make more gas available to fill US storage which currently stands 19% below seasonal normal levels. Approximately 2bcf/d of gas was delivered to the terminal before the outage with the force majeure stopping 10-12 cargoes in June even before the extension.
• The reverse impact could be felt on storage in Europe. LNG imports are vital for European energy security and to meet EU targets of 80% gas storage by the 1^st November. The missing supply from Freeport LNG could result in Europe looking away from US for further LNG supplies. Gas spreads should encourage spot cargo flows to Europe over Asia.
• Lower pipeline supplies through Nord Stream are also adding to the upward pressure on European gas prices. Flows of 100mcm/d are expected instead of recent levels nearer 140mcm/d and a max of 167mcm/d. Repairs to full Nord stream flows could take some time with a key turbine unable to return from maintenance in Canada due to sanctions.