US LNG exporters look to Europe as energy crisis mounts


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US liquefied natural gas exporters announced a spate of deals on Wednesday to beef up supplies to Europe as it suffers a mounting energy crisis.

Cheniere, the biggest American exporter, said it had reached a final investment decision to push ahead with a project that will boost its capacity by more than 20 per cent over the coming years, while a string of long-term supply deals locked in purchases of US gas over the coming decades.

The expansion of Cheniere’s facility on the Texas Coast will add 10mn tonnes a year of liquefaction capacity on top of its current 45mn tonnes. Total US capacity stands at roughly 99mn tonnes.

The announcements came amid a rash of US LNG deals unveiled on Wednesday as American exporters look to increase production and position themselves to fill the gap as Europe turns away from Russian imports.

Chemicals group Ineos, meanwhile, announced plans to start trading liquefied natural gas. Under the agreement, Britain’s largest privately owned company would buy 1.4mn tonnes per year for 20 years of the fuel from projects proposed by US company Sempra Infrastructure.

Meanwhile, Venture Global, another big Gulf Coast developer, said on Wednesday that it had struck a deal to sell 2mn tonnes per year to oil major Chevron over a 20-year period. Cheniere also inked a separate deal on Wednesday to sell 2mn tonnes a year to Chevron over a 15-year period.

That marked the company’s second major deal in two days after it announced plans on Tuesday to sell 1.5mn tonnes a year to EnBW, one of Germany’s largest energy companies, in the the first binding long-term agreement by a German company to buy US LNG.

This week’s string of deals come as gas prices in Europe have jumped more than a quarter over the past week after Russia cut capacity on its main gas export pipeline to Germany, fuelling concerns that Moscow is weaponising its gas exports in response to EU sanctions following the invasion of Ukraine.

Fatih Birol, head of the International Energy Agency, said Europe must prepare immediately for the complete severance of Russian gas exports this winter, urging governments to take measures to cut demand and keep ageing nuclear power stations open.

Europe now imports about 20 per cent of its gas from Russia, according to analysts, down from roughly 40 per cent before the war in Ukraine.

The US is the world’s leading producer of natural gas and its exporters have in recent months been running plants flat-out to increase supplies to the EU.

However, a recent fire at an LNG terminal in Texas that is responsible for almost 20 per cent of all US liquefaction capacity has crimped supply and helped drive up prices in Europe, which were trading above €125 per megawatt hour on Wednesday.

The EU and Washington announced a deal in March to increase supplies of LNG to Europe in the coming years in an effort to help the bloc break its reliance on Russian gas.

Ineos, owned by Jim Ratcliffe, has a sprawling business spanning petrochemicals, refineries and oil and gas production.

The company said its agreement with Sempra was part of a strategy to build a network of liquefaction, shipping, and regasification capacity to deliver “reliable energy” to its operations and customers in Europe and around the world.

“Our entry into the global LNG market opens new opportunities to supply affordable, clean and reliable energy to the market,” said Brian Gilvary, the former BP executive who now runs Ineos Energy. “Long-term supply . . . will help alleviate the structural energy issues in Europe.”

The deal is subject to Sempra securing the permits and financing to push ahead with two new projects.

Ineos is entering a market dominated by large oil companies and commodity traders. Vitol, the world’s biggest independent oil trader delivered almost 13mn tonnes of LNG last year.

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