US LNG Weekly: Gulf Coast FOB cargo values plunge amid European price dive
US Gulf Coast FOB daily export cargo values nosedived to below $30/MMBtu during the week of Dec. 22-29, right after rising to the highest level on record, as they continued to track prices in European destination markets.
Utilization at US liquefaction facilities, however, remained just below all-times highs set earlier in December as strong netbacks incentivized full dispatch.
A big drop-off in shipping rates from a month ago has also contributed to the bullish sentiment for US FOB cargoes, with it increasingly cost-effective for Pacific-bound tankers to divert to the Atlantic to capture the arbitrage.
Panama Canal congestion continued to ease during the week, with the maximum wait on Dec. 29 for unreserved LNG tankers at one day northbound and three days southbound, according to the Panama Canal Authority.
S&P Global Platts assessed the Gulf Coast Marker for February at $29.85/MMBtu on Dec. 29, down $1.45/MMBtu from the previous trading session and $20.80/MMBtu from the beginning of the week. Just one day earlier, on Dec. 21, GCM hit its highest level on record, at $54.95/MMBtu.
Based on nominations for the morning cycle, feedgas deliveries to the six major US LNG export terminals in operation and a seventh that is undergoing commissioning totaled 12.5 Bcf/d on Dec. 29, up about 500 MMcf/d from the previous day but about even with the level at the beginning of the week, Platts Analytics data showed. A record 13.1 Bcf/d of feedgas deliveries were observed on Dec. 19.
As commissioning toward startup continued at Venture Global LNG’s Calcasieu Pass terminal in Louisiana, feedgas deliveries totaled almost 26 MMcf/d, more than double the level observed at the beginning of the week though still too small for production. According to Venture Global, the terminal was about 91% complete as of the end of October. All 18 liquefaction modules have been received from Italy and set on foundations.
There has been a flurry of commercial activity between Chinese LNG buyers and US exporters over the last year as high end-user prices in Asia and Europe have spurred buyers to seek out term deals that carry a lower fixed price. Cheap feadgas costs and destination flexibility have made US contracts more appealing in such an environment.
Venture Global and Cheniere Energy, currently the biggest US LNG exporter, have been the beneficiaries of all the Chinese deals with US terminal operators that have been disclosed so far in 2021, though other US developers are said to be in talks with Chinese buyers.