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north-america-dominates-global-lng-export-contracts-in-2023-amidst-us-policy-uncertainty
north-america-dominates-global-lng-export-contracts-in-2023-amidst-us-policy-uncertainty

North America dominates global LNG export contracts in 2023 amidst US policy uncertainty

A new report has confirmed that North America signed more long-term contracts for the export of liquefied natural gas (LNG) than any other continent in 2023, but President Joe Biden’s recently announced limits on such exports could shake things up in the future.

The contract figures come from data and analytics company GlobalData that says 21 LNG export deals were signed by North America across the 12-month period. Sixteen of the contracts were signed in the US, four in Mexico, and one in Canada.

Bhargavi Gandham, Oil and Gas Analyst at GlobalData, says that energy companies in North America are betting on strong long-term LNG demand due to the role of natural gas as a bridge fuel for the energy transition and decarbonisation.

Gandham also noted that the Russian-Ukraine war has further provided additional opportunity for these companies to sign contracts for LNG exports to Europe.

The contracts

In the US, the largest contract was inked by NexDecade. The Texas-based LNG specialist committed to the supply of 5.4 million tonnes per annum of LNG to Europe’s TotalEnergies from 2026 to 2046.

Read more: TotalEnergies increases US LNG position with NextDecade deal

The 20-year deal would see LNG provided from NextDecade’s Rio Grande LNG project at the Port of Brownsville. Rio Grande Phase 1 includes three liquefaction trains and supporting infrastructure and is believed to be the largest greenfield project financing in US history, according to NextDecade.

When fully operational, Phase 1 is expected to produce 17.6 million tonnes per annum of LNG.

GlobalData also highlighted the Mexcio-based contracts, noting that four were signed by Mexico Pacific Limited to supply LNG from the Sonora liquefaction terminal. Among these, the most substantial contract was with ConocoPhillips for the supply of 2.2 million tonnes per annum of LNG for 20 years, from 2027 to 2047.

And 2024 is also off to a strong start for the company. In January 2024, Mexico Pacific signed its third LNG sales and purchase agreement with ExxonMobil LNG Asia Pacific (EMLAP) for an additional 1.2 million tonnes per annum of product.

Under terms of the deal, the LNG will be supplied on a free-on-board basis over a 20-year term from Train 3 of Mexico Pacific’s Saguaro Engergia project, located on the west coast of Mexico.

Read more: Mexico Pacific signs additional LNG offtake agreement with ExxonMobil

In Canada, one contract was signed by Woodfibre LNG to supply 0.5 million tonnes per annum of LNG from the Woodfibre terminal to BP plc for 15 years, from 2027 to 2042.

Read more: bp signs third LNG offtake contract with Woodfibre LNG

Paused exports

But news that US President Joe Biden has paused pending decisions on LNG exports has recently shaken up the industry. The move was seen as ‘devastating’ for international relations.

Despite mounting pressure to transition away from fossil fuels, the US President said, “We will take a hard look at the impacts of LNG exports on energy costs, the US’ energy security, and our environment. This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.”

A White House statement made little reference to the impact on industry but heavily referenced the devastating toll of climate change and its impact on young people and frontline communities, who are using their voices “to demand action from those with the power to act.”.

In a separate statement, the White House said the current economic and environmental analyses the DOE uses to underpin its LNG export authorisations are “roughly five years old” and no longer adequately account for energy cost increases.

Alongside external pressures, the US is committed to an 80% clean energy target by 2030 and has attracted around $200bn in private clean energy investments following the passing of the Inflation Reduction Act (IRA).

And the friction between policymakers and industry over LNG is intensifying.

According to a LinkedIn statement from Venture Global LNG, which is developing the Calcasieu Pass LNG export facility in Louisiana and targeting 10 million tonnes per annum of LNG annually, the Biden-Harris administration “appears to be putting a moratorium on the entire US LNG industry.”

“Such an action would shock the global energy market, have the impact of an economic sanction, and send a devastating signal to our allies that they can no longer rely on the United States. The true irony is that this policy would hurt the climate and lead to increased emissions as it would force the world to pivot to coal.”

Decarbonisation Summit 2024: Industrial Gases and Clean Energies 3.0

The global industrial gas and equipment business has an imperative role to play in the future of clean fuels and decarbonisation. The energy transition simply won’t happen without it.

At the same time, the industry has its own activities to decarbonise and circular economies to carve out – think green air gases and bio-based carbon dioxide (CO2), as well as CO2 utilisation and e-fuels, and so much more besides.

There are pathways to progress and questions to answer on this journey, not least:

  • What are the compelling clean fuels and what do the pathways to production look like?
  • How can the gases industry participate in this playground of opportunities?
  • What can other alternative fuels mean for the CO2 industry and its stakeholders?

These questions and more will be in the spotlight at gasworld’s Decarbonisation Summit in April 2024. Interested in speaking and contributing? Get in touch with our Content Director, Rob Cockerill, at [email protected]

To attend, sponsor and for more information, visit https://bit.ly/GWDECARB-S24 


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