Page 12 - NorthAmOil Week 50 2020

NorthAmOil COMMENTARY NorthAmOil

period. As with FIDs on LNG projects, long- agreement with India’s Petronet LNG. Total is
term offtake agreements have been rare this reported to be able to back out of its Driftwood
year, but the fact that this deal was struck sug- LNG commitments if an FID is not made by
gests that at least some interest still remains in June 2021.
locking in supply over the long term. Total also has offtake agreements for Cheniere
ECA LNG also has a 20-year sale and pur- Energy’s Sabine Pass LNG and for the third train
chase agreement (SPA) in place with Japan’s at privately owned Freeport LNG. It inherited
Mitsui & Co., covering 800,000 tpy, which the Freeport contract when it acquired Toshiba’s
means that all of the plant’s initial offtake capac- US LNG business last year.
ity is fully contracted. Globally, the French company has also been
on an LNG-focused spending spree over the
LNG giant past few years, most notably buying Anadarko
Total’s decision to buy equity in ECA LNG marks Petroleum’s 26.5% stake in Mozambique LNG
an extension of both the French company’s LNG for $3.9bn last year, and taking on operatorship
co-operation with Sempra and of its already of that project.
extensive LNG investments. Further investments in the LNG industry can
Total and Sempra signed a memorandum be expected from Total, though how much more
of understanding (MoU) on the development it wishes to grow its LNG business will depend
of North American LNG projects in 2018. in part on how the energy transition evolves.
Under the MoU, the companies agreed to look There have been suggestions that natural gas Total is reported
at Total potentially contracting for up to 9mn will increasingly fall out of favour over the
tpy of LNG offtake across both ECA LNG and longer term, with operators shifting their focus to be able to
a proposed second phase of Cameron LNG in to renewables instead. But there are considera- back out of its
Louisiana. Total also has a 16.6% stake in Cam- ble costs involved in moving away from oil and
eron LNG, which has been online since 2019, gas altogether, and the LNG industry has sought Driftwood LNG
and buys a portion of the output from Phase 1 to talk up gas’ role as a bridge fuel that would still
of that project. be cleaner than coal but more affordable than an commitments
Total’s North American LNG investments all-out shift to renewables.
are not limited to its co-operation with Sem- Total says on its website that it is seeking to if an FID is not
pra, which currently appears to be one of its provide cleaner energy, for example by using made by June
more successful LNG partnerships. The French LNG to partly fuel its LNG tankers. The com-
company also owns a stake in Tellurian and its pany has a target of net zero greenhouse gas 2021.
proposed Driftwood LNG project in Louisiana, (GHG) emissions by 2050 and can be expected
as well as an offtake agreement relating to that – like other European peers – to increasingly
project. The challenging market this year has focus on that goal. This could involve a shift
caused Total to sell down its stake in Tellurian to carbon-neutral LNG, among other steps, or
earlier this year, however, cutting it from 19% to a broader move away from LNG over the long
17.4% according to regulatory filings. term. On the other hand, cost considerations
Tellurian has struggled to move forward with could keep Total and other major LNG players
Driftwood LNG, delaying an FID on the project prioritising the super-chilled fuel as a major part
earlier this year and failing to finalise an offtake of their portfolios for many years to come.™

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