Friday, June 22, 2018

Cheniere's U.S. LNG Outage Spurs European Reload Activity to Asia

Posted by June 5, 2018

Photo: Cheniere Energy

Cheniere Energy, dealing with an ongoing partial outage at its Sabine Pass liquefied natural gas (LNG) plant in Louisiana, is making use of its idle tankers to pick up LNG in Europe for sale in Asia where prices are surging, traders said.

Feedgas volumes into Sabine Pass fell by a third to 2 billion cubic feet/day on May 15 and have remained there ever since, according to flow data from three pipelines serving the facility.

The plunge reflects an outage at the plant's third liquefaction train, traders said. Cheniere declined to comment.

With less fuel to ship from the U.S., Cheniere is using its excess transportation capacity to conduct re-loads of LNG from north-west European terminals, traders said.

The Cheniere-controlled Oak Spirit tanker loaded a cargo from Rotterdam's Gate terminal last week, followed by the Clean Planet at France's Montoir port.

The Kita LNG tanker, currently stationed offshore Gibraltar, could potentially perform a reload as well, analysts said.

Reloads are attractive due to the widening premium of Asian spot LNG prices to European benchmarks, making cross-basin trade profitable despite the added cost of re-exporting cargoes held in storage.

Asian spot LNG <LNG-AS> hold a $2.19 per million British thermal unit (mmBtu) premium to Britain's month-ahead gas price at the National Balancing Point trading hub, the widest level in months.

Traders besides Cheniere are making use of the premium to divert supplies east following a flurry of re-load deals in recent weeks and further dealmaking expected given strong markets in Asia, traders said.

Reporting by Oleg Vukmanovic, editing by Louise Heavens

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