Another liquefied natural gas (LNG) vessel was thought to be headed toward the United States on Monday where it could deliver a cargo for import as early as Thursday.
ClipperData said in a note over the weekend that the Madrid Spirit loaded a cargo in Nigeria on May 25 and could be headed toward a number of other destinations in the Atlantic Basin, including those in the Caribbean, South America or Mexico.
ClipperData’ Kaleem Asghar, director of LNG analytics, told NGI on Monday that the ship’s current route suggests it’s likely to arrive in the United States, specifically at Kinder Morgan Inc.’s Elba Island export terminal in Georgia. Asghar stressed, however, that the ship would need to be monitored closely as there’s limited economic incentive to send cargoes to the United States given how low gas prices are.
He said the facility could need the cargo after a fire knocked out one of its smaller movable modular liquefaction units last month, but added that there’s little else to justify the ship’s arrival on the Gulf Coast. Most U.S. export terminals have import capacity and the ability to send gas back onto the country’s pipeline grid, as they were built to do just that, but regasification at the facilities has long been underutilized.
A cargo reloaded in Belgium late last month was reportedly headed for Cheniere Energy Inc.’s Sabine Pass export terminal in Louisiana and was expected to arrive this week. But the delivery won’t happen, as the British Diamond moved toward the Livorno LNG Terminal offshore Italy in the days after Belgian port data showed Sabine Pass as its initial destination. The ship is now empty and en route to Trinidad and Tobago, according to ClipperData.
U.S. LNG imports could increase slightly this summer given how low global gas prices are as traders shuffle cargoes in a distressed market. Ashgar said these are “extraordinary times” given the worldwide supply glut and pandemic that has destroyed demand. He noted that if additional cargoes head for the Lower 48, they’re most likely to land at Exelon Corp.’s Everett LNG import facility in Massachusetts, which took in its last cargo on May 8.
As the arbitrage window between the United States and markets in Asia and Europe has largely shut through the fall, more than 100 U.S. cargoes scheduled for loading during that time have been canceled, according to shipbroker Poten & Partners. Feed gas deliveries to U.S. terminals again dipped below 4 Bcf/d over the weekend.
Tudor, Pickering, Holt & Co. (TPH) noted that the biggest drop came from Sabine Pass, the largest U.S. export facility, with volumes down to just 1.1 Bcf/d.
The Cameron and Cove Point export terminals have had higher utilization rates as cargoes have fallen off over the last month, TPH added. Both have more customers in Asia, where buyers have canceled fewer cargoes. Cove Point also benefits from its location in Maryland with access to discounted Appalachian feed gas, TPH said.
“Many are onselling on a delivered ex-ship basis into Asian markets” and passing through costs, while others are using LNG to meet portfolio commitments, Wood Mackenzie said last week of the facilities’ customers in the region.
Meanwhile, tropical storm Cristobal made landfall in southeastern Louisiana on Sunday and was downgraded to a depression by Monday, when it had moved inland. While Genscape Inc. said natural gas production in the Gulf of Mexico has fallen by more than 1 Bcf/d over the last week due to the storm, LNG export facilities had monitored it but reported no impacts.
EBW Analytics Group said Monday that the storm could still disrupt vessel traffic in and out of Louisiana export terminals.
U.S. LNG exports decreased during the week ending June 3, when 10 vessels departed with a combined carrying capacity of 36 Bcf. That’s down from 12 vessels that carried 43 Bcf in the prior week, according to the U.S. Energy Information Administration.
In international developments, the Organization of the Petroleum Exporting Countries and its allies agreed to extend collective May and June oil supply cuts of 9.7 million b/d for another month to continue rebalancing an oversupplied global crude market. Brent crude, to which many LNG supply deals are tied, didn’t budge as the market had already expected the cuts heading into the weekend and appeared to bake that outlook into last week’s jump in prices, said Rystad Energy’s Bjornar Tonhaugen, head of oil markets.
Myanmar also received its first LNG imports, according to an announcement from state-owned Malaysian energy giant Petronas, which said last week that it delivered two cargoes to the country between May and June. Myanmar joins a club of 42 countries that imported LNG last year, according to the International Group of Liquefied Natural Gas Importers.
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