US LNG exports to face 40-45 cargo cancellations in August

U.S. liquefied natural gas (LNG) exporters could see the cancellation of an estimated 40-45 cargos for August loading, similar to levels reported for July loadings, Kallanish Energy reports.

Citing unnamed sources, Reuters reported earlier this week Cheniere is likely to see 30 cargos canceled, while up to 10 shipments could be canceled from the Freeport LNG project.

The companies didn’t comment on the matter. However, Cheniere said its contracts allow buyers to have flexibility, while still guaranteeing revenues to the company. As well as the destination flexibility, to sell on cargos, buyers can also choose not to lift cargos, but pay the liquefaction fee to Cheniere.

“This helps our customers effectively manage their energy portfolios through market cycles, while still providing Cheniere with reliable cash flow,” a spokesperson said.

The expected decline in U.S. LNG exports are reflective of a slow recovery in gas demand in Asia and record high European gas stocks. The latter has narrowed down the Dutch benchmark TTF premium over the Henry Hub price, making U.S. LNG an uneconomical option.

The TTF August contract was trading 10 cents higher than the Henry Hub on Monday. “At those levels, European buyers are looking at a loss of over $5.00 compared with just paying a cancellation fee of $3.00-3.50,” Reuters quoted a trader as saying.

This post appeared first on Kallanish Energy News.