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Freezing Weather Forces the World’s Top LNG Exporter to Import Gas
Several energy companies imported liquefied natural gas into the United States, with the unusual move prompted by surging demand for energy and heating pushing gas prices to all-time highs.
According to LSEG data cited by Reuters, BP and Shell sent LNG cargoes from their jointly owned Atlantic LNG plant in Trinidad and Tobago to the U.S. last week. In fact, per the data, most of the LNG coming into the United States amid the freeze is coming from Trinidad and Tobago. The gas arrives at import terminals for regasification and distribution, although some cargoes arrived at two export terminals – Elba Island and Cove Point – highlighting the tight supply situation.
The severe winter weather sweeping across the United States has not only led to a surge in the demand for electricity and heating but has also disrupted the production of oil and gas. According to Rystad Energy, as much as 25 billion cu ft in daily production may have been knocked out by the storms and the freezing temperatures.
Oil production has suffered as well, with outages in the Permian alone estimated at 1.5 million barrels daily, according to Energy Aspects. Total oil production outages may have reached 2 million barrels daily, resulting in a rally for oil prices, with Brent crude earlier today inching closer to $70 per barrel and West Texas Intermediate at $64.11 per barrel. LNG prices on the spot market, meanwhile, hit $100 per million British thermal units at one point, according to Reuters.
The unusual situation of the U.S. having to import the commodity it is the biggest exporter of on a global level has its explanation in the Jones Act, which the industry has been grumbling against for years. The Jones Act effectively bans the trade in LNG between U.S. ports because it mandates that all trade between local ports must be executed using U.S.-flagged vessels. There are no U.S.-flagged LNG carriers.
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