"US gas exporters sign flurry of deals as Europe searches for supply" - The Financial Times

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US gas exporters sign flurry of deals as Europe searches for supply

LNG processor Cheniere also greenlights capacity boost for Texas liquefaction project

 

US liquefied natural gas producers have announced a string of deals to boost exports as the industry capitalises on shortages that have left Europe with a mounting energy crisis.

Cheniere Energy, the biggest American exporter, said it had reached a final investment decision to push ahead with a project that will boost its capacity more than 20 per cent by late 2025, while long-term supply deals also locked in purchases of US gas over the coming decades.

The expansion of Cheniere’s facility in Corpus Christi 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 announcement came amid a flurry of US LNG sale and purchase agreements unveiled on Wednesday as American exporters position themselves to fill the gap as Europe turns away from Russian imports.

Venture Global, another exporter on the Gulf of Mexico coast, said it had struck a deal to sell 2mn tonnes per year to oil major Chevron over a 20-year period. Cheniere also inked its own deal with Chevron for 2mn tonnes a year over a 15-year period.

The Venture Global deal marked the company’s second major contract in as many 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 first binding long-term agreement by a German company to buy US LNG.

Chemicals group Ineos, meanwhile, announced plans to start trading LNG. Under the agreement, which is at an earlier stage than the others, 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.

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 invasion of 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 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.