Page 7 - NorthAmOil Week 18 2022

NorthAmOil COMMENTARY NorthAmOil

European companies
were previously more
concerned about
the environmental
credentials of US LNG
but are now prioritising
energy security.

900,000 tonnes per year of LNG from Cheniere the days of the Trump administration, which left
over a 20-year period, up from 0.4-1.2mn tpy office at the start of 2021, but others remained
over an 11-year period under the initial sale and resistant, focusing instead on renewables.
purchase agreement (SPA) between the two In the wake of the war in Ukraine, though,
companies. energy transition goals are being viewed increas-
This week, Engie also struck a new SPA with ingly through the lens of energy security.
the US’ NextDecade. (See: NextDecade strikes Last week, the Wall Street Journal cited
offtake deal with Engie at last, page 10) This deal sources familiar with the matter as saying that
is notable because Engie had previously pulled both EU and White House officials had been
out of talks with NextDecade in 2020 over envi- telling industry executives recently that they do
ronmental concerns, and reportedly under support long-term supply contracts. And some
pressure from the French government. France’s officials have made public remarks on the issue
concerns centred on the use of hydraulic frac- as well.
turing to produce the shale gas used as feedstock “There’s a real potential here for Europe to
for US LNG even as the technique has been signal the demand for US LNG and for our US
banned in France for 11 years. But the fact that LNG providers to provide that gas to them in the
Engie had struck its original deal with Cheniere form of long-term contracts,” the US National
last year – before the war in Ukraine bolstered Security Council’s senior director for climate In the wake of the
Europe’s appetite for US LNG – illustrates that and energy, Melanie Nakagawa, who also serves
environmental concerns have increasingly been as a special assistant to Biden, said at an event war in Ukraine,
edged out by rising energy demand. hosted by the Center for Strategic and Interna- though, energy
Other buyers committing to more US LNG tional Studies.
include Shell, which signed a new deal in March On the European side, similar sentiments are transition goals
for an additional 2mn tpy of the super-chilled being echoed.
fuel from Venture Global LNG. This is in addi- “The political commitment is there to invest are being viewed
tion to the 2mn tpy that Shell is already buying in this relationship,” a European Commission
from Venture Global, which brought its first spokesman for energy and climate issues was increasingly
LNG export terminal on the US Gulf Coast into also quoted by the Wall Street Journal as saying through the
service this year and is working towards a final last week.
investment decision (FID) on a second plant More talks over new deals to supply LNG to lens of energy
nearby. Europe are certain to be underway, but not yet
public, given that a number of European com- security.
What next? panies is moving to expedite construction on
Presenting US LNG as an attractive alternative to new LNG terminals and has not yet unveiled
Russian pipeline gas was something the admin- any offtake agreements. Such deals can take
istration of former US President Donald Trump time to negotiate, but it would not be surpris-
had pursued, with limited success. Some Euro- ing to see other European LNG buyers follow in
pean buyers, including Poland’s PGNiG, did sign Engie’s footsteps and announce SPAs with US
offtake agreements with US LNG producers in suppliers in the coming weeks and months.™

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