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Algeria’s difficulties in exporting its LNG cause significant squeeze on world supply

December 16, 2020

Algeria is currently facing bad weather which is blocking the dynamism of its LNG industry. Thus, the reduction in global supply in the face of growing demand is pushing up LNG spot rates in Asia. Algiers thus allows a significant financial windfall to escape.

Since the beginning of December bad weather has prevented the Algerian public hydrocarbons company (Sonatrach) from exporting national LNG production from the port of Arzew, which houses the GL3-Z liquefaction complex. This is what a source close to the market who chose to remain anonymous told Bloomberg .

The situation has led to a drop in world supply in a context where with the economic recovery, Asian countries need fuel to run their industries in particular. In addition, many large importers are preparing for winter and need to build up stocks to face temperatures that will drop further in the coming weeks.

In addition to these difficulties, it should be noted that Algeria was already facing, since mid-August, other export problems. This situation comes on top of the unplanned maintenance work underway in recent months on liquefaction facilities in Australia and Qatar, two of the largest LNG exporters.

As a result, spot prices climbed to their highest level in Asia for about two years.

To compensate for the reduction in its presence in this market, Australia, the second largest exporter, has nonetheless boosted its gas flows via pipelines to southern Europe, assure traders.