US LNG commissioning cargoes to enter bearish summer market

Source: Heren

2019/03/16

HOUSTON (ICIS)--Four new US LNG trains - three coming from new additional LNG export projects - are due to come online during the second and third quarters of this year, which leads to an overall bearish sentiment on the growth of supply this summer.

Cheniere’s second train at Corpus Christi is due to start up imminently, according to market sources. The exact date of Corpus Christi’s Train 2 was not immediately confirmed but sources said Cheniere’s previous track record of startups at Sabine Pass and Corpus Christi Train 1 means that there is a higher confidence that first LNG loadings would be timely.

The startups will test the abilities of US-based utility Sempra Energy, Freeport LNG and US-based Kinder Morgan as operators of liquefaction plants.

Sempra Energy’s Cameron LNG plant in Hackberry, Louisiana, and Freeport LNG in south Texas are also expected to start sometime in July.

Sempra earlier stated that Cameron LNG was due to start in early 2019, but market sources said July was a more realistic timeframe for the project, given the previous delays that have affected the construction timeline.

Kinder Morgan last stated that Elba LNG near Savannah, Georgia, was beginning the commissioning process but did not give a date of first loading. Portfolio seller Shell is taking all of the 2.5mtpa in export capacity from Elba LNG.


Marketing of commissioning volumes

The impact of multiple US LNG plants starting up around the same time means additional cargoes to be added to the spot market, because commissioning volumes are nearly always designated for the spot market due the unpredictability of timing and sometimes specs during the commissioning process.

Cheniere’s trading subsidiary Cheniere Marketing is expected to be handling all of the volumes from Train 2 at Corpus Christi, similar to what the subsidiary has done for Sabine Pass Trains 1-5 and Corpus Christi Train 2.

At Cameron LNG, market sources said the long-term offtakers – France-based Total and Japanese trading houses Mitsui and Mitsubishi – would likely divide up the commissioning volumes among the joint partners, although this was not immediately confirmed.

Sources said that portfolio seller Shell was expected to be given the first rights for the commissioning cargoes from Freeport LNG. As many as eight cargoes could potentially be produced from Train 1 during the commissioning process, but fewer cargoes could be expected for the startups of Trains 2 and 3 once those units come online.

Sources also said Swiss-based trading company Trafigura was expected to take the commissioning volumes from Trains 2 and 3 upon startup.