Top U.S. gas exporter, Freeport LNG, is expected to further extend the seven-month-long outage of its export plant in Texas to February, as it awaits regulatory approvals, three sources told Reuters on Jan. 11.
Accounting for 20% of U.S. LNG exports, restarting the facility is important to ease the squeeze of global LNG supplies, especially as Europe is rebuilding its gas storage after Russia cut gas exports following Moscow's invasion of Ukraine.
"There has been no official messaging, but nobody expects any cargoes until end-February at the earliest," one of the sources said.
"Second half of January is now out of sight," another source said.
A Freeport LNG spokeswoman said the restart timeline still stands and the company was still targeting the second half of this month for the safe, initial restart of its liquefaction facility, pending regulatory approvals.
The facility was initially expected to restart in October, but pushed back that target several times since the plant first closed on June 8 following a fire that a consultants' report determined was due to inadequate operating and testing procedures, and human error and fatigue.
In late December, the company said reconstruction work was substantially complete but regulators need to approve the restart, adding it did not anticipate the initial restart of its liquefaction facility to begin until the second half of January 2023.
The delays have forced big customers including JERA and Osaka Gas9532.T to book hundreds of millions of dollars of losses. Its other big offtakers include BP, TotalEnergies and SK E&S.
U.S. LNG exports have been steadily increasing for years and in 2022, the United States became the top supplier of LNG to Europe, where demand soared following Moscow's decision to largely cut off piped gas supply.
Both the U.S. Federal Energy Regulatory Commission (FERC) and the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) need to approve Freeport's return to service.
Many analysts do not expect the plant to return until the first or second quarter because the company still has a lot of work to do to satisfy regulators.
Recommended Reading
What's Affecting Oil Prices This Week? (July 22, 2024)
2024-07-22 - While oil traders have been adding to their net long positions in recent weeks, the rate of increase has slowed. Last week, traders of WTI increased their net long positions by only 4.25% by increasing their long positions while decreasing their short positions, while traders of Brent crude decreased their net long positions by increasing their short positions.
Oil Settles Slightly Up on Forecasts for Strong Global Demand
2024-06-11 - Oil prices edged up to settle slightly higher on June 11 as the U.S. Energy Information Administration raised its global oil demand growth forecast for the year, while OPEC stuck to its forecast for relatively strong growth in 2024.
Oil Settles $1 Down After US Job Data Revised Significantly Lower
2024-08-21 - U.S. employers added far fewer jobs than originally reported in the year through March, the Labor Department said on Aug. 21.
Commentary: Oil Traders Ignore Dwindling Stocks to Focus on Economy
2024-08-08 - Oil prices have retreated in recent weeks as traders look past the current depletion in global inventories to focus on the threat of possible economic slowdowns.
Oil Prices Ease on Strong Dollar, Mixed Global Economic News
2024-06-21 - Crude prices declined despite signs of improving U.S. oil demand and falling fuel inventories that helped boost crude prices to a seven-week high a day earlier.