By Rhod Mackenzie
Washington has finally got its own way: American liquefied natural gas (LNG) has become very popular and has become the subject of serious competition, which is escalating every day. Europe and China have become the main participants, striving to strengthen their energy security and signing long-term contracts with American energy companies and exporters for its supply. In addition to energy security, a nice feature of these contracts for buyers is the permission to sell it if necessary. This clause of the contract was actively used by Chinese energy companies last year, reselling gas to Europeans, when demand for it fell due to coronavirus lockdowns and restrictions in China, and grew in Europe.
“The more supplies (of gas), the better for the market,” Rystad Energy analyst Sindre Knutsson explains to the Financial Times. “The more contracts for the supply of liquefied gas are signed, the more projects for its export will be.”
Despite worries about inflation, US LNG producers plan to approve a record number of projects to increase their gas export capacity. This has given them courage and confidence in this risky business, the growing demand for LNG on a global scale and the transition to long-term contracts even for European buyers, who previously did not favor such contracts.
Venture Global LNG has already approved one such project this year (in March). We are talking about the second stage of the Plaquemines LNG terminal with an estimate cost of almost 8 billion. The second LNG project approved in the US in the first half of this year is the construction of the first phase of the Port Arthur LNG terminal by Sempra in Jefferson County, Texas. In early July, NextDecade plans to sign a final investment decision (FID) on the Rio Grande LNG project. FID is the last step before construction begins. The project, with a planned capacity of 16.2 million tons of LNG per year, also involves Global Infrastructure Partners (GIP) and TotalEnergies. TotalEnergies will own 16.7% of the shares of the first phase of the project. The French oil and gas giant is ready to buy 5.4 million tons of gas over 20 years.
Total is active in the US LNG market. In June, he already signed a 15-year contract with US gas exporter Equinor for an annual supply of approximately 1.75 million tons of gas from Cheniere.
In June, the German energy company Securing Energy for Europe (Sefe) also signed a 20-year contract for the supply of American LNG, by the way, a state-owned company. Venture Global LNG will supply it with 2.25 million tons of gas.
After the phasing out of Russian gas last year, European buyers, which Brussels, a leader in the transition from fossil fuels to renewables, used to require short-term contracts, are now actively moving to long-term contracts, under which all major producers and exporters of liquefied gas work. .
China's gas appetite is so great that Qatari gas alone is not enough for it, and despite bad relations with Washington, it is also actively operating in the American gas market. Last week, Cheniere Energy signed a long-term contract with the Chinese company ENN. Of the details, we only know that the contract is designed for more than 20 years and is already the second contract of the Chinese company with Cheniere.
American exporters also sign contracts with buyers from other Asian countries, in particular from Japan. With strong demand for LNG and a shift to long-term contracts that reduce financial risks, as well as high gas prices, $100 billion worth of LNG projects are planned in the US over the next 5 years, according to energy consulting firm Wood Mackenzie.
This article originally appeared in Russian at expert.ru