TTF gas resumes rally as Australian LNG supply fears grow

13 Sep 2023

Quantum Commodity Intelligence – European natural gas futures Wednesday resumed the price rally, as markets remained highly volatile amid the growing likelihood of supply disruptions in Australia, along with more localised issues offshore Norway.

Concerns continued to grow that industrial action being taken by Chevron staff working at gas installations in Australia is poised to escalate, with the US energy major currently taking steps to get an injunction against full-blown strike action via Australia’s complex arbitration system.

Benchmark TTF futures for Oct23 closed Wednesday around 6% higher at €36.817/MWh, following a late-afternoon spike after news from the Asia-Pacific region filtered through to Europe.

According to reports, at least one Japanese buyer has been told by Chevron to make provisions for alternative supplies, which is viewed as critical since Japan receives around 30% of Gorgon output and 83% of Wheatstone, according to research from S&P Global.

China's Sinopec has also bolstered winter supplies with its 25-LNG cargo tender going out to end 2024 heavily biased towards this year, with over half of the deliveries set for Q4 2023.

While Europe buys very little Australian LNG, supply curbs in Australia mean European buyers will face stiffer competition for US spot cargoes from Asian powerhouses including China, Japan and South Korea.

European gas markets also found support after maintenance at Norway’s Troll field, Europe’s largest, was further extended until later in the week.

In the US, technical problems continue to dog the Freeport LNG processing plant with volumes of dry gas feeding into the plant registered at zero by early Wednesday, suggesting a more serious problem than first envisaged.

The Texas plant only recently returned to full capacity following a pipeline explosion in June of last year.