Europe’s natural gas prices surged after a fire at a large export terminal in the US promised to wipe out deliveries to a market that’s on high alert over tight Russian supplies, according to Bloomberg.
Benchmark futures traded in Amsterdam snapped a six-day falling streak, while UK prices jumped more than 34%. The Freeport liquefied natural gas facility in Texas, which makes up about a fifth of all US exports of the fuel, will remain closed for at least three weeks. The US sent nearly 75% of all its LNG to Europe in the first four months of this year.
The closure comes as pipeline supplies from Europe’s top providers are also capped. Key facilities in Norway are undergoing annual maintenance this week, while Russia’s supplies are below capacity after several European buyers were cut off for refusing to meet Moscow’s demands to be ultimately paid in rubles for its pipeline fuel.
Europe has been particularly reliant on US LNG to help offset risk of disruption to Russian pipeline imports, and ample supplies of the fuel in the past weeks had calmed the market after wild swings earlier this year.
The extent of the damage to the Freeport facility is not yet clear, but the fire could potentially knock out abut 16% of total US LNG export capacity “for an unknown period if the fire damage proves difficult to repair,” analysts at Evercore ISI said in a note.
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 the fuel.