One of three trains at Australia's 15.6mn t/yr Gorgon export terminal will be off line for five weeks, a source familiar with Gorgon operations told Argus on 7 May.
The train has been off line since 30 April because of a mechanical fault in a turbine.
The five-week shutdown expectation is slightly longer than the initially expected shutdown period of about 2-3 weeks, traders said.
Each week of downtime on one train at Gorgon reduces the terminal's available liquefaction capacity by about 100,000t. The five-week shutdown is likely to reduce the terminal's production by about 5-8 cargoes, traders said. One standard-sized cargo is roughly equivalent to 60,000-70,000t of LNG.
But overarching sentiment from market participants is that the impact on both prices and supply will be limited, as only one train is affected and there are ample cargoes for June and July.
There will be a temporary spike in prices as affected buyers — if any — will have to secure prompt cargoes to replace lost LNG from Gorgon, keeping prices supported well above $10/mn Btu, traders said. The shutdown will have a greater impact on prices if repair works drag on for longer and affect summer deliveries, they added.
The ANEA price, the Argus assessment for spot LNG deliveries to northeast Asia, for the first and second half June were assessed at $10.57/mn Btu and $10.58/mn Btu on 7 May, higher by 40¢/mn Btu from the previous day. First- and second-half July ANEA prices were assessed at $10.64/mn Btu and $10.66/mn Btu, up by 36¢/mn Btu/mn Btu from a day earlier.
Chevron has rescheduled deliveries of some LNG cargoes for their Asian offtakers, according to some traders. Further details are unclear.
Shell might have bought around 3-4 cargoes because of the shutdown at Gorgon, according to traders. It is not clear whether the cargoes are for June or July delivery. Some traders have offered both June- and July-delivery cargoes to Chevron but the firm has responded by saying that the shortfall can be managed by optimising its own portfolio, traders said.
The Gorgon LNG joint venture is operated by Chevron with a 47pc stake, while ExxonMobil and Shell hold 25pc each.
