Page 5 - AsianOil Week 34 2022

AsianOil COMMENTARY AsianOil

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

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