Gas prices jump after fire cuts US shipments to Europe by a fifth
GAS prices surged by more than a third yesterday after a fire at a large export terminal in the US threatened to wipe out deliveries and deepen global supply issues caused by Russia’s war in Ukraine.
UK gas prices jumped as much as 39pc in early trading before settling around 22pc higher. The European benchmark rose as much as 16pc.
A fire broke out at the Freeport liquefied natural gas (LNG) facility on Quintana Island in Texas on Wednesday, forcing it to shut down operations.
Freeport is one of seven US terminals that receive gas via pipelines and liquefy it before loading it onto tankers.
The site, which makes up about a fifth of all US gas exports, will remain closed for at least three weeks, threatening to leave essential fuel stranded in shale basins.
It comes as Europe ramps up its imports of LNG from the US – as well as other countries including Qatar and Australia – amid concerns Russia could turn off the taps to the Continent amid a row over payment in roubles.
The US sent nearly 75pc of all its LNG to Europe in the first four months of this year. The extent of the damage to the Freeport facility is not yet clear, but analysts at Evercore ISI warned the fire could potentially knock out about 16pc of total US LNG export capacity “for an unknown period if the fire damage proves difficult to repair”.
Russian pipeline supplies are below capacity after Vladimir Putin cut off gas to several European buyers. Key facilities in Norway are also undergoing maintenance this week, putting a further squeeze on supply.
However, the Kremlin said yesterday it did not expect to cut off supplies to any more European customers, insisting its demand to make buyers pay in roubles was working as planned.
State energy giant Gazprom has cut supplies to Denmark’s Orsted and to Shell for its contract to supply gas to Germany, as well as to Dutch gas trader Gasterra, Bulgaria, Poland and Finland after they refused to pay in roubles.
Dmitry Peskov, the Kremlin spokesman, said everyone who was to be cut off from supplies was now not receiving Russian gas.
He said: “The system is functioning … and those who receive the gas are working under the new system.”
The EU has said member states can continue buying Russian gas without breaching sanctions provided they do not open rouble accounts at Russian banks.
Companies from Germany, Italy and France have said they would engage with Moscow’s payment scheme to ensure they can maintain supplies, while the bloc plans to gradually cut its dependence from Russia in the next couple of years.