Page 5 - FSUOGM Week 37 2022

FSUOGM COMMENTARY FSUOGM

to cheaper supplies represent an opportunity to Europe this year, for example. And others that do
resell more expensive volumes from elsewhere to not export LNG from the US are still nonethe-
other buyers in Europe and Asia. less eyeing Europe, including Chevron, which
According to a separate Bloomberg report, recently signed supply deals to buy US LNG
China National Offshore Oil Corp. (CNOOC) from Cheniere and Venture Global LNG. The
is reportedly offering to sell a cargo from the super-major already has a significant presence in
North West Shelf project in Australia. This fol- the Asian LNG market thanks to its operations in
lows similar moves by China’s other state-owned Australia, from where it primarily supplies major
energy giants, Sinopec and PetroChina, to resell buyers of the super-chilled fuel such as Japan and
LNG cargoes from US LNG terminals to buyers South Korea.
in Europe earlier this year. However, supplying Europe is easier from
“It appears China is happy to take Russian elsewhere, and Chevron is now seeking to add
LNG cargoes at discounts, swapping out alter- assets that are better positioned to meet Euro-
native supply that can then be directed to Europe pean demand. It also has upstream assets in the
at higher prices,” a Credit Suisse energy analyst, Permian Basin, and could seek to convert that
Saul Kavonic, was quoted by Bloomberg as gas to LNG for transport to Europe.
saying. Chevron’s vice president for midstream,
The report added that smaller Chinese LNG Colin Parfitt, told media this week that the com-
importers including ENN Energy Holdings and pany is now more of a global player and is seek-
JOVO Group had also been actively offering ing to meet some of Europe’s growing demand.
to sell shipments for delivery to ports in Asia, He identified the US and the Eastern Mediter-
according to traders familiar with the matter. ranean as being among the leading regions that
Russian LNG exports to China are estimated could be targeted for this purpose.
to have reached their highest level in at least
two years in August. At the same time, LNG What next?
shipments from the US to China have slumped. One challenge for the US, however, is that it
Indeed, both US sellers and Chinese buyers are could see more domestic demand for its gas out-
currently keen to divert cargoes to Europe. put over the winter. Looking further ahead, new
liquefaction capacity is also set to come online
Targeting Europe in the next couple of years that could put fur-
These developments come amid rising concerns ther pressure on the US’ gas industry to produce
over tight supply of gas over the coming win- more.
ter. Europe has rushed to replenish its stocks in The US is likely to keep targeting Europe for
anticipation of ever-declining deliveries of pipe- now, but over the longer term its LNG will not be
line gas from Russia. For both US and Chinese enough to supply Europe in the absence of Rus-
LNG players, this represents an opportunity to sian gas, and may also cause additional supply
sell volumes at a higher profit. pressures at home. Further realignment of global
Around 70% of what Cheniere Energy – LNG and pipeline gas trade flows will likely be
the US’ largest producer of LNG – has gone to needed. For now, though, they remain in flux. ™

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