Page 4 - GLNG Week 13 2022

GLNG COMMENTARY GLNG

Chinese buyers turn to next wave

of US LNG projects for supply deals

New supply deals have been struck in recent days between Chinese buyers and developers

of yet-to-be-built US LNG export terminals

PROJECTS & CHINESE buyers and US LNG developers benchmark from Rio Grande LNG in Texas over
COMPANIES struck new supply agreements during the final a 20-year period. The agreement requires the
week of March. The first of the deals was a bind- companies to finalise a sales and purchase agree-
WHAT: ing heads of agreement (HoA) between Next- ment (SPA) in the second quarter of this year.
Chinese buyers have Decade and Guangdong Energy Group Natural The agreement marks a step forward for Rio
struck new deals for Gas for supply from the proposed Rio Grande Grande LNG after NextDecade delayed an FID
LNG supplies from US LNG terminal. Separately, Energy Transfer on the project until the second half of this year –
terminals that have yet to signed two sale and purchase agreements (SPAs) the latest in a series of delays for the project. The
be built. with ENN Natural Gas and its subsidiary ENN company also has an SPA with Shell, covering
Energy Holdings, for LNG from the planned 2mn tpy of LNG from Rio Grande, but had been
WHY: Lake Charles LNG export terminal. struggling to lock in other buyers.
China recently became This illustrates the continuation of a trend This is despite the fact that NextDecade has
the world’s largest that began last year when Chinese companies claimed it will produce the greenest LNG in
importer of LNG and increasingly signed offtake agreements for sup- the world at Rio Grande, using carbon capture
continues to seek out new plies from the US. Now these deals are playing and storage (CCS), net-zero electricity and
supplies. out against the backdrop of increased competi- responsibly sourced gas (RSG) to cut the facil-
tion for LNG, with Europe also turning to US ity’s emissions by more than 90%. This was not
WHAT NEXT: LNG as it scrambles to reduce its reliance on enough to win over France’s Engie, which pulled
The agreements take Russian gas. out of talks over a potential supply deal in late
a new crop of US LNG The newly announced deals take a crop of 2020 amid reports of pressure from the French
terminals a step closer to new US LNG export terminals, whose fate had government not to buy LNG produced using
an FID. previously been considered less certain, a step shale gas – and therefore hydraulic fracturing,
closer to a final investment decision (FID). which is banned in France. It is worth noting
that Engie has since signed and expanded a sup-
NextDecade deal ply deal with another US producer – Cheniere
NextDecade’s deal with Guangdong Energy Energy – as demand has risen in Europe. The
covers the purchase of up to 1.5mn tonnes per French government is also a lot more keen on
year (tpy) of LNG indexed to the Henry Hub gas LNG imports as Europe moves to cut imports

NextDecade has talked
up the potential to cut
most of the emissions
from Rio Grande LNG.

P4 www. NEWSBASE .com Week 13 01•April•2022