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Shell Warns Of Prelude LNG Disruptions

Prolonged labor strikes at Shell's Prelude LNG facility will disrupt shipments from it for the next two weeks, the supermajor warned this week.

"We have issued a notice to customers that cargoes will be impacted until at least mid-July due to the industrial action," Shell said, as quoted by Reuters.

The floating LNG production facility in northwestern Australia has an annual capacity of 3.6 million tons. The news of a halt to operations adds to an already difficult situation for gas importers after Russia reduced the flow along the Nord Stream 1 pipeline by 60 percent, and an explosion took Freeport LNG out of commission for at least three months.

This latest disruption comes just three months after an outage that shut Prelude down for four months. The strike is a response to Shell's refusal to concede to some of the demands made by the Australian Workers' Union.

The Prelude FLNG facility, which shipped its first cargo in 2019, is one of a series of massive-scale LNG projects in Australia that allowed the country to briefly take the crown of top world LNG exporter from Qatar a while ago.

Now, Qatar has another challenger—the United States—which has taken to expanding LNG export capacity as quickly as possible in response to strong demand for gas from Europe as it seeks to reduce its dependence on Russian hydrocarbons.

Qatar is also expanding its production capacity with the $30-billion North Field project that involves several supermajors, including Exxon, Shell, and TotalEnergies. The goal of the project is to increase the country's LNG production capacity from 77 million tons annually to 110 million tons.

Australia's capacity is rather similar to Qatar's, with the country exporting some 77.7 million tons of LNG across the world last year. The United States, which measures its LNG capacity in bullion cubic feet per day, had a peak export capacity of 12.98 billion cu ft daily last year, up from just 1 billion cu ft daily in 2015.

By Irina Slav for Oilprice.com

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