Page 5 - GLNG Week 11 2022

GLNG COMMENTARY GLNG

regularly talked up the use of debottlenecking across Europe to US LNG imports. In late 2020,
and optimisation to boost production from its Engie abandoned talks over an offtake deal with
existing trains. These efforts have helped it to would-be US LNG developer NextDecade,
increase the capacity of its trains from 4.5mn amid reports that it had come under pressure
tpy to 5mn tpy. Cheniere’s CEO, Jack Fusco, has from the French government not to import
described the additional volumes these efforts LNG that had been produced from shale gas.
had resulted in as equating to a “virtual train” Reports of Engie’s deal with Cheniere
of LNG. emerged around a year later, as Europe was deal-
The company welcomed the DoE’s new ing with rising gas demand and prices. Under
approvals, noting in brief the impact they could these circumstances, US LNG appears to have
have. become less objectionable – though it is worth
“This authorisation will allow for additional noting that neither Engie nor Cheniere put out
operational flexibility for us and our custom- statements about the original deal they struck
ers during this pivotal time and for decades to last year. Instead, it was announced in a filing Even prior
come,” Cheniere was quoted by Reuters as say- with the DoE and subsequently picked up by
ing in an emailed statement. media sources. to the DoE’s
The updated agreement the two companies announcement,
What next? struck last week was publicly announced by
Even prior to the DoE’s announcement, there Cheniere, though. And the deal’s extension to there were
were already indications that Cheniere was 20 years suggests that LNG could have a role to
making a push to sell more LNG to Europe. play in European energy for longer than those already
On March 9, the company said it had amended focused on decarbonisation of the continent
a previous sale and purchase agreement (SPA) have previously suggested. indications that
with France’s Engie, increasing the volumes cov- “This SPA reflects the importance of a diverse Cheniere was
ered by the deal and extending its duration. and reliable long-term supply of natural gas for
Under the amended deal, Cheniere will Europe and reinforces the value the LNG mar- making a push to
supply Engie with 0.9mn tpy over 20 years, up ket places in Cheniere’s commitment to climate
from 0.4-1.2mn tpy over an 11-year period pre- and sustainability initiatives,” Fusco stated last sell more LNG to
viously. The original deal was already notable week.
because it appeared to represent something of Things are currently in flux and the debate Europe.
a u-turn for Engie. over what role natural gas has to play in a decar-
US LNG producers use shale gas as feedstock, bonising world will doubtless continue. But
but hydraulic fracturing – the technique used for the moment, LNG’s prospects appear to be
to tap shale formations – is banned in France improved, and Cheniere has greater flexibility
and there is broader environmental opposition to maximise its exports to Europe.™

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