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Cheniere receives LNG cargo cancellation for February from Italy's Enel: sources

Highlights

High vessel charter rates may be a factor

December's zero US cancellations first in nine months

Houston — Italian utility Enel canceled an LNG cargo for February delivery from Cheniere Energy, which operates two liquefaction terminals and is the biggest exporter in the US, market sources said Dec. 21.

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Around five cargoes were heard to have been canceled across US LNG terminals for February delivery, sources said.

The reason for the latest US cancellations, following only as many as two for January and none for December, appears to be a lack of shipping availability and aggressively high charter rates. Cheniere was heard to have secured a Woodside 174,000 cu m vessel for a multi-month charter. The delivery date heard was around late January in North Asia, with a charter length of 70 to 90 days. Hire rate heard was $130,000 to $150,000/day.

An Enel spokesperson did not immediately respond to a request for comment.

The latest cancellations come despite strong netbacks for US cargoes, which have spurred record liquefaction activity at the six major terminals on the Gulf and Atlantic coasts. The S&P Global Platts JKM for February was assessed 29.0 cents/MMBtu higher day on day at $11.402/MMBtu on Dec. 21. The benchmark for spot LNG deliveries to Northeast Asia had recently risen above $12/MMBtu, an almost seven-fold increase from its historic low on April 28 at $1.825/MMBtu.

Customers are generally required to provide advance notice of cancellations from US liquefaction terminals -- in Cheniere 's case that is at least 40 days before the beginning of a given month. US exporters are largely protected by fixed fees they receive when customers cancel, although cancellations force them to lower production.

When Cheniere, which operates Sabine Pass Liquefaction in Louisiana and Corpus Christi Liquefaction in Texas, received no cargo cancellations for December, that was the first time that had happened since the global demand shock from the coronavirus pandemic began in March. It was a sign of the building market recovery due to robust prices in end-user markets in Europe and Asia. At least 175 cargoes across the US were said to have been canceled for loading between April and November, based on a Platts tally.

Feedgas deliveries to major US liquefaction terminals totaled 10.54 Bcf/d on Dec. 21, down from 10.67 Bcf/d Dec. 20 and a record 11.58 Bcf/d on Dec. 13, Platts Analytics data showed.