US LNG WEEKLY: FOB cargo values fall again amid limited European slots

Scarce slot availability in Europe and tepid demand in Asia pushed down US Gulf Coast FOB daily export cargo values for the fourth straight week Jan. 11-18.

The drop was tempered by a further decline in shipping rates, which was supportive of netbacks.

Traders said volatility in delivered prices was making it difficult to determine fair value for FOB cargoes.

"No one would buy FOB now if you do not have a slot in Europe," said an Atlantic-based trader.

S&P Global Platts assessed the Gulf Coast Marker for March at $21.90/MMBtu Jan. 18, up 60 cents from the day before, but down $2.85/MMBtu from the beginning of the week. A month earlier, Dec. 21, GCM hit an all-time high of $54.95/MMBtu. Since then, delivered prices in Europe have fallen sharply overall, although they have been up and down from day to day, in a nod to the volatility in the market.

GCM still ended the most recent week up more than fourfold from the same day a year earlier. Relatively robust netbacks have continued to provide an incentive for high utilization at US LNG export terminals.

During the most recent week, feedgas nominations rose at US liquefaction terminals to an average of 12.9 Bcf/d, Platts Analytics data showed.

The main driver was Cheniere Energy's Sabine Pass terminal in Louisiana, with the facility nominating, on average, 4.9 Bcf/d during the week, about 16% higher than the previous week. All the other terminals showed similar feedgas nomination levels as in the previous week, except Kinder Morgan's Elba Liquefaction in Georgia, where flows declined slightly week on week.

Venture Global LNG received approval from US regulators Jan. 12 to flow gas to the first two LNG trains at its Calcasieu Pass terminal in Louisiana, as commissioning toward startup continues. The 18-train facility will have a capacity of 10 million mt/year once it fully ramps up.

Calcasieu Pass and Qatar Petroleum- and ExxonMobil-backed Golden Pass LNG in Louisiana are the only two liquefaction terminals currently under construction in the US. There are six major LNG export terminals in operation. Golden Pass' startup is targeted in 2024.

As for projects under development, Glenfarne Group, whose up to 4 million mt/year Texas LNG terminal has been proposed to be built in Brownsville, Texas, said Jan. 18 it had executed a pipeline transportation precedent agreement with Canadian midstream operator Enbridge for the expansion of the Valley Crossing Pipeline. The expansion would be able to deliver about 720 MMcf/d of feedgas to Texas LNG.

VCP comprises a 160-mile 42- and 48-inch-diameter pipeline originating at Agua Dulce, a major Texas gas hub, and extending to the Port of Brownsville. Under the deal with Enbridge, a 10-mile lateral will be built to extend the pipeline to Texas LNG's facility, along with the addition of compression facilities on the existing pipeline.

On the sidelines of a conference last September, an executive said that based on ongoing commercial discussions and its own internal demand, Glenfarne believed it will be able to make a final investment decision on Texas LNG by the end of 2022 and its Magnolia LNG project in Louisiana by the end of 2023. The developer has not announced any firm offtake agreements since those comments. In a statement Jan. 18, the developer maintained its final investment decision target for Texas LNG, with commercial startup expected in 2026.

Meanwhile, Panama Canal congestion eased during the most recent week, with the maximum wait Jan. 18 for unreserved LNG tankers transiting the passageway at two days northbound and two days southbound, according to the Panama Canal Authority.