(Bloomberg) — An explosion that will keep a major US liquefied natural gas export terminal shut for weeks will cut vital supplies to Europe, which is already struggling with uncertainty around flows of the fuel from Russia.
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The Freeport LNG export facility in Texas will remain closed for at least three weeks after a fire on Wednesday, a company spokesperson said. Almost a fifth of all overseas shipments of gas from the US went via the terminal last month.
See also: The US Is Now Sending the Bulk of Its Export Gas to Europe
The US sent nearly three-quarters of its LNG to Europe in the first four months of the year, with the region now getting almost half of its supplies of the power-station, heating and industrial fuel from across the Atlantic. Some European countries have been attempting to wean themselves off Russian gas due to the invasion of Ukraine, but remain dependent on it in the short term.
The Texas outage is also coinciding with the start of the northern hemisphere summer, when increased use of air conditioners boosts demand from power stations. It’s likely to push European and Asian LNG prices — which are already trading well above levels for this time of year — higher still.
The US is one of the world’s top LNG exporters, along with Australia and Qatar. The Freeport plant, which has the capacity to ship about 15 million tons per year, supplies gas to BP Plc and TotalEnergies SE in Europe, as well as Japan’s Jera Co. and Osaka Gas Co., and SK E&S Co. in South Korea.
LNG buyers will probably start hunting for replacement shipments from the spot market, but there is a dwindling amount of supplies available, according to traders in Asia. The move is likely to boost already intense competition between Asia and Europe for gas. Prices in Europe fell to three-month low on Wednesday, due in part to expectations for more supplies from the US.
US natural gas tumbled after the fire, which will increase domestic supplies. Futures fell 6.5% to $8.138 per million British thermal units as of 9:22 a.m. in Singapore on Thursday, after dropping 6.4% in the previous session.
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