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Explosion at US LNG terminal adds to global supply strain

13 June 2022

An explosion at a liquefied natural gas (LNG) plant in the city of Freeport, Texas raised fears of a shortage in supply of gas on June 8. Freeport LNG said its plant would be closed for three weeks as a result of the blast at a time when there is already a global strain on LNG supplies.

Image: Quintana Beach County Park
Image: Quintana Beach County Park

The Freeport LNG facility, which provides 20% of US LNG processing, can process around 2.1 billion cubic feet of natural gas per day (bcfd) and at full capacity can export 15 million tonnes per annum (MTPA). According to Reuters news agency, 68% of Freeport LNG exports in the last three months have gone to European countries, including the UK. Global LNG demand has been high in recent months as countries look to lower their dependence on Russian energy following the invasion of Ukraine.

Company officials said that the cause of the blast is unknown, however the facility is likely to be closed for at least three weeks. An investigation has been opened.

As news of the shutdown emerged, US LNG markets fell while European gas prices rose by one-fifth as traders feared a reduction in supply at a time of heightened demand. Freeport LNG, which was found in 2002, processes LNG for companies including BP, TotalEnergies, JERA, Kansai Electric, Osaka Gas, and SK E&S.

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