|End-of-day quote - 04/22|
CERAWEEK-After cold snaps, Freeport LNG sees strong demand for LNG this summer
|03/03/2021 | 03:42pm|
March 3 (Reuters) - U.S. liquefied natural gas company Freeport LNG expects demand for LNG will be strong this summer as buyers around the world rebuild inventories after an extremely cold winter, the company's chief executive said on Wednesday.
Last summer, Freeport and other U.S. LNG export plants reduced output as coronavirus demand destruction caused some prices to fall to record lows and buyers to cancel cargoes.
This year, a cold snap in Europe and Asia in January and in North America in February boosted heating demand and prices to record levels in several markets, while at the same time cutting inventories.
"We look to a strong summer this year as inventories need to be refilled," CEO Michael Smith said IHS Markit's virtually-held CERAWeek conference.
During the Feb. 13-20 freeze in the United States that disrupted natural gas production while at the same time boosting demand for electric from gas-fired power plants, Smith said Texas Governor Greg Abbott asked Freeport to help the state manage gas supplies.
Smith said Freeport shut all liquefaction trains at its plant in Texas within a couple of days of the governor's call.
By shutting the plant, Freeport's customers were able to sell the gas that they had previously bought to send to the plant into the market at much higher prices.
Smith could not say where Freeport's customers sold the gas but said they likely "made money in multiples."
Freeport's customers include units of Osaka Gas Co Ltd , JERA, BP Plc, Total SA and SK E&S. JERA is an alliance between Tokyo Electric Power Co Holdings Inc and Chubu Electric Power Co Inc.
Smith also said recent global gas prices spikes caused more companies seeking to buy LNG to talk about possible long-term contracts, which, if signed, could move Freeport closer to making a decision to build a fourth liquefaction train at its plant in Texas.
(Reporting by Scott DiSavino Editing by Marguerita Choy)