Gas prices continue to fall as market expects Freeport LNG terminal restart

Natural gas prices on European wholesale markets continued to fall at the start of this week. In addition to stable pipeline supplies, the market expects liquefied natural gas (LNG) exports from the Freeport terminal, one of the largest LNG terminals in the United States, to recover. The terminal was shut down as a precaution at the beginning of the month because of Hurricane Beryl, which hit the Gulf of Mexico region.

The Freeport LNG terminal, located on the coast of the US state of Texas, is the country's second-largest export terminal. In recent years, the terminal has become notorious for a series of problems. One example is the explosion that knocked the terminal offline in June 2022 for more than six months. Given the tight market conditions at the time, the outage also had an immediate and significant impact on gas prices in Europe.

The latest in a series of incidents was the complete shutdown of the terminal at the beginning of the month, caused by Hurricane Beryl. After wreaking havoc across the Caribbean, the hurricane hit the US coast on 8 July in an area with several LNG terminals. One of them was Freeport, whose operator decided to shut it down as a precaution the day before.

Although Hurricane Beryl had weakened significantly by the time it reached the Texas coast, it still caused some damage to the terminal, according to Reuters. Initial speculation that operations would resume quickly was followed by delays. Over the past weekend, however, the terminal partially resumed operations, exporting its first cargo in nearly three weeks. According to Reuters, the tanker Gaslog Wales, carrying the first cargo after operations resumed, had been waiting at the terminal for two weeks.

The terminal operator said at the start of the week, according to the agency, that it was safely continuing to bring its liquefaction trains back online. It did not provide further technical details. European gas markets responded to the partial resumption of operations over the past weekend with a slight decline on Monday and yesterday.