Mild weather causes LNG oversupply in Argentina

According to Reuters, mild temperatures in late winter have hit fuel demand in Argentina, forcing Enarsa to divert or cancel incoming LNG shipments. The state-run company, which is also the country’s largest LNG importer, originally launched back-to-back tenders in June and July 2016 following a cold start to winter. However, Reuters reports that milder weather in August has left the company with a supply overhang. Already, three cargoes have been delayed until 2017.

In addition to this, Reuters reports that there is no room to simply store these imports, due to high stock levels at Argentina’s two import terminals, Bahia Blanca and Escobar.

One trading source reportedly said that the country’s LNG suppliers, which include BP, Gunvor and Shell, are able to levy penalty fees of up to US$5 million for cancellations. However, the head of institutional relations and communications for Enarsa, Fernando Pazos, reportedly denied paying penalties, saying that the company sometimes pays a stop fee when a vessel is located outside of a port, but is unable to enter due to poor weather. Nonetheless, Reuters reports that live ship-tracking data shows that seven tankers are now located outside of the country’s import terminals.

Edited from various sources by David Rowlands

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/02092016/mild-weather-causes-lng-oversupply-in-argentina-2991/