Global supply trends

Published at 09:00 27 Mar 2019 by

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LNG supply continued to post healthy y/y gains in February and in March (based on early indications), but there have been no sequential increases on December 2018 numbers. While Yamal T3, Sabine Pass T5 and Corpus Christi T1 are all supplying volumes, we still await exports from Prelude. Other new supply is looking tardy, with delays likely for the first trains at Cameron LNG and Freeport LNG, while the absence of news on the second train at Ichthys also suggests that first exports from there are highly unlikely to be in April. While the juggernaut of new supply train projects continues in the US, Australia is increasingly torn between exporting LNG, keeping domestic gas prices low, and meeting environmental goals.

Initial indications suggest that Global LNG exports were 1.8 Mt higher y/y in February with implied daily flow slightly down (0.1 Mt per day) m/m. Early indications suggest March exports will be up y/y by 4.4 Mtpa (we expect some downward revision) but that daily flow rate should be unchanged m/m. That means total monthly supply has not grown since December 2018, suggesting only modest new LNG from the four trains that started commissioning in the final month of last year.

One train that has been consistently producing is the 4.5 Mtpa Sabine Pass T5, which was declared substantially complete on 8 March. Commercial service start-up is now expected in the coming weeks as the terminal received FERC approval to do so. March weekly exports from Sabine Pass T5 are starting to come in much higher, with Kpler data suggesting average weekly exports of 0.5 Mt, compared to averages closer to 0.4 Mt between November 2018 and January. After weeks of intermittent exports, there has been a marked and consistent increase in flows from Corpus Christi—three of the last five weeks have exceeded 0.13 Mt per week—suggesting full-capacity production from the first train. Exports from the Yamal trains remain strong, although after a considerable 0.34 Mt ramp-up m/m between November 2018 and December 2018, flows have held steady around the 1.3 Mt per month. The 4.2 Mtpa Ichthys plant, which came online in October 2018, has largely produced consistently at 0.45 Mt per month in Q1 19, having ramped up to full capacity within four months. Shell’s 3.6 Mtpa Prelude has yet to export any LNG, despite the consistent investor guidance given last year that suggested positive cash flow would be achieved in 2018. In late February, Shell said it would ‘shortly be producing LNG’, despite a late December 2018 announcement it was already doing so. First exports still seem somewhat distant, with no tankers reported as heading towards the facility.

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