US LNG WEEKLY: Weaker netbacks push Gulf Coast FOB cargo values lower

US FOB Gulf Coast LNG cargo values slid during the week ended Feb. 15 as netbacks from destination markets narrowed due largely to lower prices in Europe and Asia.

Mild weather and easing geopolitical worries, at least for the moment, were cited for the bearish signals in the market. Shipping rates remained relatively cheap, and maximum wait times for unreserved LNG tankers transiting the Panama Canal were modest as the week ended.

Netbacks and prices were still sharply higher than at the same time a year ago – dynamics that have incentivized US liquefaction terminals to operate at or near full capacity since the fall of 2021.

S&P Global Platts assessed the Gulf Coast Marker for cargoes loading 30 to 60 forward at $20.450/MMBtu on Feb. 15, $2.650/MMBtu lower week on week, flipping to Northwest Europe as the best netback.

Average feedgas nominations to the seven major US LNG export terminals stood at around 12.6 Bcf/d for the week of Feb. 8-15, Platts Analytics data showed. That was up from around 12.5 Bcf/d the previous week. Month to date, feedgas nominations to the Gulf Coast facilities were up more than 6% since the beginning of February.

Feedgas demand at Venture Global LNG's Calcasieu Pass facility in southwest Louisiana was at a record high of almost 377 MMcf/d on Feb. 15, Platts Analytics data showed. The Yiannis tanker continued to be moored at the facility for loading of Calcasieu Pass' first commissioning cargo. It arrived at the facility Feb. 7. Venture Global, which initially had targeted departure for Feb. 11 but missed that as it awaited a final US regulatory clearance, has declined to say when the JERA-controlled tanker would be fully loaded and ready to head out.

Elsewhere, Freeport LNG in Texas nominated 8.7% more feedgas, on average, in the week of Feb. 8-15, while the other five US export facilities remained about on par versus the previous week, Platts Analytics data showed.

Another dozen or so US project developers are hoping to build LNG export terminals, though most, despite the run-up in prices in end-user markets, continue to face challenges securing sufficient long-term offtake contracts to obtain financing for construction costs.

Tellurian plans to begin construction of its Driftwood LNG terminal in Louisiana in April, even if it doesn't have financing in place by then to complete the first phase of the up to 27.6 million mt/year project. In his weekly podcast posted on the company's website Feb. 15, Executive Chairman Charif Souki said recent word that two major institutional investors had taken over 5% of Tellurian shares was a sign that US shale gas was increasingly being viewed as a fuel that will aid the global energy transition.

"All the wind is in our sails," Souki said.