Page 7 - NorthAmOil Week 34 2022

NorthAmOil COMMENTARY NorthAmOil

year reached a 20-year deal for 2mn tpy of LNG explained by the fact that China tends to be hes-
from Mexico Pacific LNG markets – specifically itant about relying on any one country too much
its upcoming West Coast North American LNG for its energy imports. It may also be because
project in Sonora, Mexico. Woodside is reluctant to contract too much sup-
NextDecade has signed three long-term ply under long-term deals, and would prefer to
deals with Chinese buyers this year, including let the project benefit from continuing signifi-
in March a heads of agreement (HoA) with cant demand for LNG on the Asian spot market.
Guangdong Energy Group Natural Gas for
1.5mn tpy of supply for 20 years from the Rio Implications for Europe
Grande LNG project in Texas. In April, it struck China’s thirst for long-term LNG supply will Notably absent
a 20-year agreement with ENN for a further have implications for Europe, which appears
1.5mn tpy of LNG from Rio Grande, and then to be struggling to pen many agreements itself, from this frenzy
in July it agreed to deliver 1mn tpy of LNG to despite initiating a host of new LNG regasifi- of deal-making
China Gas. cation projects over the months since Moscow
Qatar too is stepping up its LNG trade with launched its invasion of Ukraine. Simply put, has been
China. In September last year, QatarEnergy while China is bullish on the long-term demand
signed a deal with CNOOC for 3.5mn tpy of prospects for gas, especially given its ongoing Australia, despite
supply over 15 years, and in December, China efforts to phase out coal-fired power eventually,
Suntien Green Energy in December reached a Europe is reluctant to make long-term commit- its dominant role
contract with Qatargas 2 for 1mn tpy over 15 ments to purchase gas because its policymakers as a supplier to
years, and Guangdong Energy Group Natural assume that gas demand will fall significantly in
Gas Co. agreed to buy 1mn tpy of LNG from for the coming years as the energy transition gains China.
10 years from QatarEnergy. momentum.
Notably absent from this frenzy of deal-mak- This makes policymakers and the energy
ing has been Australia, despite its dominant companies following those policies more
role as a supplier to China. And this is despite attracted to short-term LNG agreements. But
the fact that Woodside’s Scarborough project is this is not the preference of the suppliers, put-
under construction and only 36% of its supply ting Europe at the risk of being outcompeted on
is contracted. Woodside took a final invest- terms by Asian customers. And the latest frenzy
ment decision (FID) on the Scarborough and of long-term deals in China suggests that may be
Pluto Train 2 projects last year. This might be exactly what is happening.™

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