LNG Canada increases production as Iran's war threatens global supplies

LNG Canada, a Shell venture, increased production?and exported to Asia in this month. LSEG data shows that the Iran 'war' threatens Asian natural gas supply, which is particularly vulnerable to disruptions on a global scale. Data shows that the LNG project at Kitimat in British Columbia exported five cargoes during the first eleven days of March. This is already more than half the volume it had in February. A sixth shipment will depart on Tuesday. Two cargoes were sent to Japan, while two others went to South Korea and one to Philippines. According to LSEG data, the plant appears to be close to operating at its full capacity of 14.?million metric tonnes per year.

LNG Canada has not responded to an immediate request for comment.

The project can export just over 1.2 million tons of metric tonnage per month. The data showed that in the first third of this month, it had loaded over 400,000 tons. The global markets rushed to adjust after Qatar, who supplies 20% of the world's LNG, was forced to stop production and declare "force majeure" when the conflict prevented tankers from passing through the Strait of Hormuz.

ROUTE TO THE PACIFIC

Martin King, RBN Energy analyst, said that they are stepping up their efforts to reach full capacity and to increase LNG production to Asia to take advantage of the higher prices.

LNG Canada is the first large-scale Canadian LNG plant to begin production, and the first major North American facility with direct access the Pacific. This reduces the sailing time for Asian buyers in comparison with the U.S. Gulf Coast exporters.

LSEG data shows that the plant has experienced operational challenges from startup, but has increased?output gradually since January.

Canadian gas producers increased production in anticipation of LNG Canada starting up last summer. However, prices fell when the project failed to draw down supplies at the rate that the markets had expected.

Mike Belenkie is the CEO of Advantage Energy, which was one of several companies who temporarily reduced?production when Western Canadian Natural Gas prices briefly went negative in September.

The daily spot price at the Alberta Energy Company's (AECO) storage facility hovered around $2 per million British Thermal Units on Tuesday. This was a $1.25 reduction from the U.S. Henry Hub benchmark. Curtis Williams reported from Houston, Amanda Stephenson from Calgary and Nathan Crooks edited the story.

(source: Reuters)