The Strategist

Hurricane Harvey derails supplies of liquefied gas from the US to the APR

09/01/2017 - 12:45

Effects of Hurricane Harvey made US terminals, which account for 90% of US LNG exports, stop sending propane and butane to countries in the Asia-Pacific region.

Brant Kelly
Brant Kelly
This was reported by Bloomberg agency. According to the expert on the oil market, Bert Gilbert, the dispatch of tankers with liquefied gas from the terminals of the Gulf of Mexico stopped on August 25.

Leading private US companies engaged in the supply of liquefied gas, in particular Enterprise Products Partners LP and Targa Resources Inc, have already reported closure of their terminals. At the same time, representatives of the ports of Houston, Freeport and Beaumont, the largest port complexes in the region, said that they do not know if they will be able to arrange dispatch of ships.

This situation has already benefited the Middle East suppliers: as Bloomberg notes referring to sources among traders, companies such as Saudi Aramco and Kuwait Petroleum, this week already announced that they raise prices for the September contracts for the supply of propane and butane for Asian consumers at $ 40-60 per ton.

Co-founder of En*Vantage consulting company Peter Fasullo noted that the rise in prices for liquefied gas will continue in the near future due to the fact that it will be difficult for companies to resume the work of terminals.

"I think we will not see improvement in the situation soon." If this period extends into weeks, it may turn out that it will take from one to three weeks until the export is restored. "The rally in prices for propane may continue, because when the export terminals resume their work, companies will begin to seize significant amounts of stocks from storage."

Also, it cannot be ruled out that this situation will serve as a lesson for those countries that counted on the fact that stable and uninterrupted energy supplies from the US will help to ensure them "energy independence".