Cameron LNG restart uncertainty underpins price gains

Expectations in the market for when the currently shuttered 15mn t/yr Sempra-operated Cameron LNG facility in Hackberry, Louisiana in the US is likely to restart operations range from the end of this month to the end of October, with the uncertainty helping to underpin rising Asian spot prices.

But there has been no official guidance from the project, which is still seeking to "minimise impacts on... timeline for the re-start of Cameron LNG operations".

"We have begun the process of safely mobilising work crews and are in close contact with Entergy Louisiana, the waterworks district that serves Hackberry, and the Lake Charles Pilots regarding their restoration timelines, how we can assist their efforts, and how to minimise impacts on our timeline for the re-start of Cameron LNG operations," a spokesman at the facility said.

She did not comment on when the plant would resume operations or for how long loadings would be delayed as the firm does not comment on commercial arrangements with customers. She added that the preliminary assessment is that the Cameron LNG site is in "relatively good condition", subject to the firm's ongoing detailed examination of all the operational and safety systems and considering the extensive damage to the surrounding area.

Term offtakers at and co-owners in the Cameron facility include Mitsubishi, Mitsui and Total. These firms have supply agreements with Asian buyers including Taiwan's CPC, India's IOC, Japan's Jera, Kansai Electric, Tokyo Gas, Toho Gas and Tohoku Electric.

Feed gas flows to Cameron were still at zero on Friday. The US was closed for a public holiday on Monday.

Cameron's shutdown has added to combination of factors including uncertainty over production and shutdown schedule at Australia's 15.6mn t/yr Gorgon LNG facility and strength in European gas prices that have sent Asian spot prices higher over the past month. The front half-month ANEA price, the Argus assessment for spot LNG deliveries, has risen by around 71.5pc to $4.52/mn Btu onn7 September from $2.635/mn Btu on 3 August.

A few market participants including an offtaker at the facility expect that Cameron could restart within the end of this month.

"Originally it seemed like the restart timing would be mid-September but due to electricity problems this is extended," a trader with an offtaker said. "We believe (the restart will be) within this month or shorter. Sempra is eager for a restart and the state government has to restart the energy business as it is an essential service."

But others suggest that significant damage to power infrastructure across western Louisiana make a two-month timeline more likely, as a restart hinges on some amount of dredging work around the terminal and the reinstallation of power lines.

Entergy, western Louisiana's main power utility, said on 2 September that the hurricane had caused "catastrophic damages", which require "almost a complete rebuild of our transmission and distribution system that serves Calcasieu and Cameron parishes".

It said at the time that it had no specific estimate for restoring the higher-capacity lines needed to support industrial operations. Emergency services, hospitals, water departments and other essential services remained the priority, followed by powering up the areas that would supply the most customers at a time.

The Calcasieu waterway, which leads to the Cameron facility, is currently restricted to vessels with a draught of below 34-36 ft (10.3-11 metres). This means that most unladen LNG vessels would be able to access the waterway, given the typical draught of an unladen LNG tanker is around 9.5m.

But the draught would need to be higher to accommodate vessels, once laden. The US Coast Guard revised the access restrictions on Monday, following its notice on 1 September, which restricted access to Calcasieu waterway to vessels with a draught below 30 ft during daylight hours.

A few offtakers have already made arrangements, including buying spot cargoes, to replace cargoes lost as a result of the facility being off line since 26 August, a day before Hurricane Laura made landfall and battered the Louisiana-Texas coastline. Cargo cancellations at Cameron, the 5.75mn t/yr Cove Point and the 4mn t/yr Elba Island facilities were expected to total 5-6 in August, 1-4 in September and up to two cargoes in October.

Two of the plant's offtakers were actively seeking spot cargoes and had participated in supply tenders last week, which market participants suggested was likely to replace cargoes lost as a result of the delayed loadings with Cameron offline.

But there could still be more short-covering in store.

India's IOC issued two tenders on Monday to buy a total of two cargoes for delivery in late September and early October to the 5mn t/yr Ennore terminal in Chennai and the 17.5mn t/yr Dahej LNG import terminal in Gujarat, likely to replace a missed loading on 23-27 August at Cameron. IOC has a 700,000 t/yr fob supply agreement with Japan's Mitsubishi.

A Japanese utility that receives Cameron LNG cargoes issued a tender on Monday to buy an end-October cargo. The tender closes today. It is unclear if the cargo sought is to replace a lost loading from Cameron.

By Camille Klass