Economy Finance Markets

Asian Spot markets feel the affects of the outage at Russia’s Sakhalin LNG

Russia Sakhalin LNG

Following the news of a production outage at Russia’s Sakhalin LNG, it has shaken the supply confidence while also raised spot prices in the Asian markets.

This is regardless of Sakhalin Energy, the plant’s operator saying that it would not have any drastic effect on its LNG delivery schedule.

As per reports, earlier in the week one of Sakhalin LNG’s two trains was forced to shut-down due to a technical malfunction.

And on Thursday, August 23rd,  Sakhalin Energy announced that repairs would be completed within just a matter of days.

However, Global LNG markets were quick to react to this news, as the Platts JKM for October deliveries rose from $10.1 cents/MMBtu to $11.375/MMBtu on Thursday, August 23rd.

Normally these Unplanned shutdowns at Sakhalin cause major impacts on Asian LNG fundamentals and prices, as it has nearly 8.5 million mt/year in long-term contracts with South Korea’s Kogas and various Japanese power and gas utilities.

According to several LNG traders, who did not want to be named, they claim that the latest shutdown could be extended into mid-September, which could result in the loss of almost five LNG cargoes and potential scheduling delays.

Commenting on the matter a European traded said on Thursday, August 23rd, “Our sources tell us it is a compressor failure.”

According to the data provided by S&P Global Platts Analytics, it shows that export shipments from Sakhalin have slowed down.

As per the data showed by S&P Global Platts Analytics, Average daily exports in August till the latest date are at 34.8 million cu m, which is down 2 million cu m from back in July.

The two-train facility possesses a joint nameplate capacity of 9.6 million mt/year, however, since 2012, production has remained consistently above 10 million mt/year.

Sakhalin Energy is a joint venture between Japanese trading houses Mitsubishi (10%), and Mitsui (12.5%), and  Shell (27.5%) and Gazprom (50%).