The worst period for Helium Shortage 4.0 should be over, but only if the stable operation, restart and promotion of key nerve centers around the world are achieved as scheduled. Spot prices will also remain high in the short term.
A year of supply constraints, shipping pressures and rising prices combined with wars and accidents, healthcare system challenges and soaring semiconductor demand created a perfect storm for operators of helium. On the opening day of the MENA Industrial Gases 2022 conference in Abu Dhabi, the clear message from global helium and the role of the MENA region in supply chains is that there may be some reason for optimism – whether through new products or recycling capacity and markets develop.
The helium market has experienced unprecedented pressure, mainly due to a gas explosion at Gazprom’s main New Amur plant. If it recovers this year (2023), it has the potential to make a significant contribution to supply and help moderate prices.
In fact, according to Phil Kornbluth, the Gazprom-Amur gas processing project will be the single biggest factor affecting the helium market over the next four years. Kornbluth said other factors contributing to the Helium 4.0 shortage were the outage of BLM’s crude helium enrichment unit, planned maintenance in Qatar, the diversion of gas from Algeria partly from LNG production, subsea pipelines to Europe due to the Ukrainian conflict, and more recently Australia Feed gas depletion at the Darwin plant and a fire at the Haven KS gas processing plant. Modest demand growth of around 2-4%, driven by new fab construction, and electronics overtaking MRI as the leading application – modest demand growth will only continue.
From mid-January to mid-June, the crude helium enrichment unit (CHEU) outage at the U.S. Bureau of Land Management (BLM) decreased crude helium enrichment, reducing feedstock gas to four key helium liquefaction plants, resulting in an estimated 10% global supply is withdrawn from the market. If BLM can keep operating steadily, the worst for Helium Shortage 4.0 should be over and 2023 could be the year of the transition to ample supply, but it all depends on the timing and scale of Amur production. “
There could be some helium production at Amur starting in mid-2023, but there is still a lot of uncertainty around those dates. Of course, the timing of the restart is delayed by the war in Ukraine, and because of the sanctions, the logistics of products or shipping containers to and from the Amur will be more difficult. “
Kornbluth said contract prices would continue to rise sharply, driven by cost shocks from Qatar and ExxonMobil, and spot prices would likely continue to move higher. The outlook is again very murky over the next few years and very dependent on a more stable 2023. The focus is again on when the Amur plant will eventually reopen. Prices should ease when Amur supply hits the market and supply should be ample in 2024, but given the uncertainty surrounding Ukraine and Russia sanctions this is far from a sure thing,
In terms of outlook, Kornbluth provided more details on potential project updates and market factors that could impact the global helium business in 2023 and ultimately end Helium Shortage 4.0.
Irkutsk Petroleum Company is starting up their new Yaraktinsky plant. It is a 250 million cubic feet per year plant. That’s not enough to end the shortage when it hits full capacity, but it will provide some relief. “In terms of the outlook for the first quarter of 2023, Gazprom has been telling people lately that they expect their first train to be by April and the second train to be only a few months late. But just because Gazprom said it would launch in April, which doesn’t mean it will happen. Until then, the helium market will remain oversold. Four of the five major helium giants are allocating supplies, although in some cases, since BLM Allocation percentages have increased since restarting its CHEU.”
“Overall, the worst of the shortage period is probably over. But it depends on the timing and scale of Amur production. If Amur doesn’t start up, we’ll have shortages for the rest of 2023. If Amur does start in april and the second train comes in two months later and is running fairly reliably then we should see relief from the shortage
Finally, the oft-asked question – when will Helium Shortage 4.0 end? The answer to this is optimistic, 9 to 12 months from now. We have to focus again on Amur in 2023/24. As far as the Ukraine war is concerned, liquid helium exports have so far been exempt from sanctions. As of January, Russian helium exports were not subject to sanctions. Of course, this situation could change at any time, and if the sanctions were to prevent Gazprom’s contractual partners from fulfilling their contracts, it could reduce and delay the impact of Amur supply on the global market and extend Helium Shortage 4.0 until 2024. “
Post time: Mar-01-2023
