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QUINTANA ISLAND, Texas: After an explosion at its Texas Gulf Coast facility this week, Freeport LNG, operator of one of the largest U.S. export plants producing liquefied natural gas (LNG), will be shut down for at least three weeks, delaying cargoes to Europe and further slowing the efforts of European Union (EU) countries to phase out Russian gas.

The plant provides some 20 percent of the LNG processing capacity of the U.S., therefore, the shut down has triggered alarm bells among players in markets already struggling with reduced Russian supplies and rising demand in Asia.

Most of its plant’s cargoes were historically delivered to Japan and Korea, but the shut down will affect Europe, with Russia’s invasion of Ukraine shifting flows from Asia.

While Europe should be able to make up its losses from their own gas storage, the three-week shut down will mean the loss of some 13 to 15 cargoes, but further risks remain if the shut down extends for a longer period, analysts noted.

Tamir Druz, managing director at Capra Energy, noted, “If the outage lasts months rather than weeks, the total loss can be much greater, and Europe’s more comfortable inventory situation will not be quite as reassuring. We would then expect the strong European LNG price premium over Asia to return,” said Alex Froley, LNG analyst at data intelligence firm ICIS, according to Reuters.

As traders anticipated the outage would free up supplies and help rebuild U.S. storage for winter demand, the news caused U.S. natural gas futures to drop as much as 14 percent.

However, as the market focused on rising air conditioning demand from a heatwave blanketing parts of the U.S., especially Texas, prices recovered and then rose some 2 percent.

In Europe, due to fears of lost U.S. shipments, gas prices rose by up to 20 percent, which cooled off at the close of market.

Japan-Korea-Marker (JKM) prices, which are widely used as a benchmark for Asian LNG, also rose.