U.S. LNG exporters plan projects to capitalize on European shortages

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American natural gas exporters are planning a new wave of projects to capitalize on supply shortages and global inflation in Europe – even the Biden administration says the goal is to continue “moving away” from fossil fuels.

This marks a potential dramatic catastrophe for the U.S. liquefied natural gas export industry, which only lost its ability to fight an epidemic-induced supply problem last year and doubts about the future of gas in a low-carbon world.

“Yes, that’s a good thing for American LNG,” Sharif Souki, chairman of Telefurian LNG – which hopes to build a new ারের 15 billion export plant on the U.S. Gulf coast – told the Financial Times, referring to global inflation. “It will only depend on whether the infrastructure can be built in the United States.”

Analysts say that when developers regain confidence in the future of LNG, the new construction will soon make the United States the second largest exporter of super cool fuel after Australia.

“Even before the epidemic. . . It looks like we’ve seen the end of North American LNG FIDs, “said Amber McClaugh, director of Energy Consultancy Envers.

Now McClagha hopes that five more new projects, including the expansion of existing facilities, will get the green light in the next two to three years. U.S. LNG export capacity could double to about 10bn cf / d in the first half of this year if they all come online at about 20bn cubic feet per day.

But new capabilities will not come soon to close Europe’s supply gaps this winter and avoid potential shortages, a situation the State Department’s energy ambassador, Amos Hutchstein, recently said was “putting lives at risk.”

The U.S. government, which has long been increasing American LNG exports for its geotechnical advantage as an alternative to fuel supplies from Russia, supports increasing supplies to Europe over the next few years – at least until the pace of clean energy change accelerates.

“We need to keep an eye out for the next winter and beyond, so that we can make sure that when we focus on energy conversion, we’re meeting today’s needs,” said Hutchinstein, who previously worked for Telurian.

The current crisis has “worried us for so many years about supplies to Europe,” Hochstein said, arguing that Russia is not doing what it can to alleviate market dominance.

But he said the main goal for the Biden administration remains to reduce demand for natural gas as it pushes the energy system towards decarbonization.

“This ensures that over the next few years the supply will be reliable and affordable, as well as accelerate the transition,” Hutchstein added. “It’s a complex balancing act,” he said.

As long-term energy demand changes, LNG developers say the threat of a shortage now highlights the need for more American gas in the global market.

Matt Schatzmann, chief executive of Next Day, which is expected to approve a new export megaproject in Texas this year, said “market conditions in Europe and around the world confirm that LNG calls have surpassed available supply without new projects.” Next Decade says it will capture and bury most of the carbon emissions from its plant.

Mike Sabel, head of Venture Global, another developer, echoed that sentiment, saying US LNG was “critical to meeting this growing demand and bringing energy security to Europe and beyond.” Venture Global, which recently signed a major supply agreement to supply gas to Poland, is building a plant in Louisiana and hopes to approve a second this year.

Analysts are cautious, but say that despite today’s global shortages, financiers and buyers must be willing to bet on LNG demand – which requires huge advance capital investments – to keep the world afloat by trying to burn less fossil fuels.

“US LNG has never felt so good before. . . But it’s not that easy when you know the details.

“Society and policy are trying to keep them away from establishing a 20-year gas deal in their book. They’ve been able to sell it to investors who are basically saying: ‘What are you doing? You should be in the air. ”

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