The leading US gas exporter expects growth in Europe – EURACTIV.com
Cheniere, a major exporter of liquefied natural gas (LNG) to the US, told EURACTIV that “We are ready to build additional facilities” to meet growing European demand. However, he cautioned that the additional powers will not be operational until they are deployed “the latter part of this decade”.
The United States became the world’s largest exporter of liquefied natural gas (LNG) in the first half of 2022, partially filling the gap left by Russia, whose exports to Europe fell sharply after its invasion of Ukraine in February.
There is a decrease in the Russian offer “really changed the dynamics of the streams” said Corey Grindal, executive vice president of international trade at Cheniere.
The United States has provided since the beginning of the year “A little less than 40 billion cubic meters” representing gas to Europe “almost half” He said that 80 billion cubic meters would normally come from Russia this year.
“Almost half [des livraisons] provided by [des quantités] additional US LNG”he told EURACTIV in an interview.
The rate at which the US can increase LNG supplies has exceeded European expectations.
In March, just weeks after the start of Russia’s aggression against Ukraine, the United States committed to supplying 15 billion cubic meters of LNG to EU markets during the year. “Stable demand for additional LNG in the US” about 50 billion m3 per year “at least until 2030”.
With 40 billion cubic meters already delivered, Mr Grindal said US exports were expected “relatively close” This year it is equal to 50 billion cubic meters.
Today, Cheniere is trying to strengthen this position with new projects aimed at supplying additional liquefied natural gas to Europe.
In June, the American company announced a final investment decision to increase its export capacity by an additional 10 million tons per year. If gas prices remain high enough in Europe, “I think US and global LNG will continue to flow to Europe”– said Cheniere’s executive vice president.
Additional features
However, European customers will have to wait several years for additional supplies to become available, Grindal warned, because it will take time to build the necessary infrastructure.
“When you look at the next 12 to 24 months, there is no new liquefaction capability that can realistically work”he declared. “And this is on a global scale. »
The only countries that could increase their exports are the United States and Qatar. However, these additional supplies will not start until then “the latter part of this decade”he warned.
“Unfortunately, this is the reality. “These are very expensive, very large facilities, and their construction takes three to four years.”explained Mr. Grindal.
Cheniere’s decision in June to increase gas liquefaction and export capacity by an additional 10 million tonnes per year was a major investment, he said.
“The value of this object is 8 billion dollars. So you can see the necessary funds and why we are looking for this long-term certainty from creditworthy parties to be able to support the construction of these facilities.he explained.
European gas buyers have helped support Cheniere’s expansion, Grindal said, citing Norway’s Equinor and France’s Engie. But ultimately, these expansion decisions can only be made if customers in Europe or elsewhere can sign long-term contracts that guarantee stable demand from suppliers, he says.
“Over the long term, we are poised to grow with the right contracts that justify the construction of these very large and expensive facilities.”Mr. Grindal emphasized.
However, the European Commission does not want to accept long-term price contracts, which it believes hinder the free flow of gas in Europe. Brussels instead encouraged spot trading, allowing European customers to benefit from discounted prices when supplies are plentiful.
However, in legislative proposals presented last December, Brussels took a more open approach to long-term contracts, saying they should not extend beyond 2049 and create barriers to gases, renewables and low carbon.
While Cheniere followed the discussions with interest, Mr Grindal said the final decision rested with the Europeans.
“In our opinion, there are certain policies that are kind of up in the air and have to be decided in order to sign long-term contracts for other companies or countries. But this is not really a conversation with us.”he declared.
He noted that in addition to long-term contracts, EU regulators could also help by supporting the creation of additional LNG regasification capacity needed to offload LNG carriers.
“If you don’t have more gasification plants, there will be no more LNG that can come into the continent.”said Mr. Grindal. “Whether it comes from the United States or elsewhere, it’s a matter of physics. »
Environmental concerns
However, Europeans are also concerned about the environmental impact of increased LNG imports from the US.
Environmental NGO Food and Water Action Europe a new assessment of the climate impact of increasing US LNG imports to 50 bcm per year for Europe, published last week (October 26).
“Achieving this 50 billion m3 target would generate 400 million metric tons of CO2 equivalent per year, equivalent to about 100 coal-fired power plants”we can read in the analysis.
Along with the pollution they will cause, there will be increased LNG imports from the US “incredibly expensive” It warns an NGO that estimates the total bill by 2025 at current prices “It may exceed 64 billion euros”.
US gas is also produced almost entirely by hydraulic fracturing, a technology widely banned in the European Union for environmental reasons.
“carbon emission label” on LNG carriers
EU regulators are aware of the climate risk of increased LNG imports. Last December, the European Commission imposed new reporting requirements for companies operating in the EU, as well as a ban on flaring or systematic venting of methane during production.
However, the EU executive has left foreign gas producers on the fence, saying it will consider tougher measures to regulate methane emissions from imports in 2025 when enough information is available.
Cheniere said he supported the global methane pledge launched last year by the EU and the US, under which signatories pledged to reduce methane leakage by at least 30% by 2030 compared to 2020 levels.
In February of last year, the company announced that it would start putting a “carbon label” on each LNG carrier loaded into liquefaction facilities so that customers can assess the carbon footprint of each cargo they receive.
