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LNG disruptions discount cargo costs vs natural gas hubs
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Cargoes planned for next week to be diverted from France
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Maintenance now disrupted at 13 French nuclear reactors
(Adds participation numbers for Engie and EDF)
By Forrest Crellin and Marwa Rashad
PARIS, March 15 (Reuters) - Strikes against the French
government's planned pension reform entered a second week on
Wednesday, disrupting maintenance at nuclear reactors, hitting
liquefied natural gas (LNG) prices and blocking some shipments
from refineries and depots.
A broad alliance of unions has called for an eighth day of
street protests across France since mid-January to contest
President Emmanuel Macron's plans to raise the state pension age
by two years to 64.
At least seven LNG ships heading to France have changed
course to terminals in Britain, the Netherlands and Spain since
the strike action started. The closure of French terminals for
another week would significantly hamper France's ability to
export gas to neighbouring countries.
Analysts and traders said cargoes planned for the coming
week would also be diverted to other terminals and some are
likely to be delayed. So far most of these cargoes have stayed
in Europe.
On March 5, the day before LNG strikes started, deliveries
from the four French terminals totalled about 1,165 gigawatt
hours per day (GWh/d). That shrank to 600 GWh/d on March 6 and
has been at zero since March 7, Refinitiv data showed.
The French strikes have led to discounted offers on prompt cargoes and a widening spread between European LNG cargoes and natural gas hubs, said Allen Reed, managing editor of Atlantic LNG.
As cargoes are delayed, traders offer discounts to offload them. S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in March on an ex-ship (DES) basis at $13.053 per million British thermal units (mmBtu) on March 14, up from $12.044/mmBtu on March 7.
That is a discount of $0.987/mmBtu to the April gas price at the Dutch TTF hub. The three LNG terminals operated by Engie subsidiary Elengy are expected to remain blocked until March 21, a company spokesperson said. A little more than 19% of Engie's gas and electricity industry workers were on strike on Wednesday, a company spokesperson said. That compares with 39.4% on March 7. The Fluxys terminal in Dunkirk, northern France, which has also been affected by the strike, is expected to remain disrupted until Friday morning. Maintenance was also blocked at 13 French nuclear reactors, up from six on Friday when the maintenance disruptions started, a CGT union spokesperson told Reuters. French power supply from nuclear, thermal and hydropower plants was reduced by 15.1 gigawatts (GW) by the strike, the union representative said. That equates to 25% of current total power production, data from grid operator RTE showed. However, France was exporting 2.4 GW to neighbours after morning imports, suggesting domestic supply is sufficient to meet demand. At utility EDF , 22.5% of workers were striking, compared with 41.5% recorded on March 7, a company spokesperson said. Among refiners, deliveries of refined products were partially blocked from leaving TotalEnergies' refineries and depots, while refining operations continued, a company spokesperson said.
"We are providing the necessary shipments to keep our
facilities in operation," the spokesperson added.
The Fos refinery in southern France operated by ExxonMobil's subsidiary Esso was also back on strike on Wednesday, a
union representative told Reuters.
(Additional reporting by Benjamin Mallet and America Hernandez
Editing by Christina Fincher, Mark Potter and David Goodman
)
