US LNG WEEKLY: FOB Gulf Coast cargo values rise to highest level since May 5

US FOB Gulf Coast cargo values rose to the highest level in almost four weeks May 31, amid tighter gas supplies in Europe and signs of buying interest in Asia.

Interbasin spreads narrowed during the week of May 24-31, favoring Asia as the best netback on several days.

Utilization at the seven major US liquefaction terminals was unchanged week on week, with feedgas deliveries averaging around 12.8 Bcf/d, S&P Global Commodity Insights data showed.

The Platts Gulf Coast Marker for US FOB cargoes loading 30 to 60 days forward was assessed at $22.850/MMBtu May 31, up 40 cents/MMBtu on the day and $2.90/MMBtu for the week. It was the highest level since May 5.

In Atlantic market developments during the week, Venture Global LNG made a positive final investment decision May 25 to build its second US liquefaction facility -- the 20 million mt/year capacity Plaquemines LNG -- and the associated Gator Express feedgas pipeline.

The first phase of the project – 13.33 million mt/year -- will be supported by $13.2 billion in bank financing that the developer has obtained, Venture Global said. Eighty percent of the project's total capacity has already been covered under long-term supply deals with international buyers. Phase one customers include Poland's PGNiG, China's Sinopec, China's CNOOC, European energy major Shell and France's EDF. Phase two customers include US energy major ExxonMobil, Malaysia's Petronas and US market participant New Fortress Energy.

Venture Global began producing LNG at its 10 million mt/year Calcasieu Pass terminal in southwest Louisiana in January and shipped its first cargo March 1. Besides Calcasieu Pass and Plaquemines LNG, it has proposed building two additional LNG terminals in Louisiana: the up to 24 million mt/year Delta LNG project and the up to 28 million mt/year CP2 facility.

Amid a surge in spot end-user prices since 2021, there has been a flurry of commercial activity in 2021 and during the first several months of 2022 tied to current and proposed US LNG export terminals, which offer fixed fees and destination flexibility.

An affiliate of South Korea's POSCO agreed May 25 to buy 400,000 mt/year of LNG from Cheniere Energy under a 20-year deal, the biggest US LNG exporter said. The volumes will be bought on a free-on-board basis starting in late 2026 from Cheniere's marketing unit, which among other things handles the sale and delivery of spot cargoes to global customers.

The purchase price for LNG under the agreement will be indexed to the US Henry Hub price, plus a fixed liquefaction fee, Cheniere said. POSCO is South Korea's largest steelmaker and owner of South Korea's first private LNG terminal. Cheniere said the deal will provide additional support for the 10 million mt/year mid-scale liquefaction expansion project it is developing at the site of its Corpus Christi Liquefaction facility in Texas. A final investment decision on the Stage 3 expansion is expected this summer. The deal is subject to Cheniere taking positive FID on the expansion project.