Qatargas' LNG trains 6, 7 shut, impact on cargoes uncertain: sources

Qatargas' LNG trains 6 and 7, which have a combined production capacity of 15.6 million mt/year of LNG, are currently offline, according to multiple industry sources.

Train 7 went offline in the week starting Feb. 6 while train 6 went offline in the week starting Feb. 13, according to sources.

Qatargas did not respond to requests for comment from S&P Global Platts.

Details on the cause of the shutdowns, whether they were for planned or unplanned maintenance, and the number of affected cargoes were not available.

Sources said that the outage at train 6 was expected to last approximately four weeks. No timeline for the train 7 outage was given.

"Heard issue at [Qatargas] is minor, was unexpected but they are trying to sort it out very quickly without affecting offtakers," a Singapore-based trader said.

Offtakers of the affected trains include China's CNOOC, Japanese companies JERA, Kansai Electric and Tohoku Electric, Poland's PGNiG, Thailand's PTT, and Germany's RWE Supply & Trading.

The supply disruption could further pressure the tight global gas situation amid low gas inventory in Europe and several supply constraints faced by Asian end-users.

Qatar is the world's second-largest LNG exporter, only slightly behind Australia, with current export capacity of around 77 million mt/year or 106 Bcm/year. LNG exports are forecast to reach 107 Bcm in 2022, with Asian importers holding contracts for 75 Bcm of supply, or 71% of 2022 exports, according to S&P Global Platts Analytics.

Qatar has been in focus in recent weeks because of the Ukraine crisis and its key role in supporting global LNG supply should Europe find its Russian gas supplies affected. The country's ruling emir met US President Joe Biden in Washington Jan. 31 and Qatar has said it stands ready to support partners "in times of need."

Price volatility and uncertainty stemming from the geopolitical tensions surrounding Russia and Ukraine have kept market participants cautious in the week starting Feb. 14, and is likely to keep the competition for cargoes between Asia-Pacific and the Atlantic strong into summer as price spreads between the basins fluctuate.

Platts assessed the Asia LNG benchmark JKM for April at $24.301/MMBtu Feb. 17, up from $21.731/MMBtu on Feb. 16, as colder than expected temperatures in North Asia this month buoyed sentiment around buying interest, although firm incremental demand has not been evident this week. Uncertainty around outages also supported market sentiment, sources said.

This put the JKM at a premium to the European TTF gas benchmark of 7.6 cents/MMBtu, swinging from minus 1.9 cents/MMBtu on Feb. 16, according to Platts data.

"The arbitrage to Asia is closed, no one will sell at these levels," a second Singapore-based trader said, adding that cargoes in the Atlantic will not be incentivised to move over to Asia yet even though there may be pockets of demand from Japanese and Chinese importers.