2024-01-03 18:46:00
Who says European sanctions on Russian products… says new commercial opportunities for suppliers keen on conquests. The United States, whose subsoil is full of natural gas, has understood this well. As proof: since Moscow invaded Ukraine in February 2022, American exports of this fossil fuel, on which the Old Continent relies massively to run its economy, have exploded. At the risk of replacing one dependency with another?
In 2023, the country has in any case risen to the very top in terms of export of liquefied natural gas (LNG) in the world, according to ship tracking data compiled by analysts.
Cooled to -160°C then transported by boat rather than passing through a gas pipeline, American LNG has multiplied records, with 88.9 million tonnes (122 billion cubic meters) sold outside the domestic market, i.e. +14.7 % compared to the previous year. In December alone, 8.6 million tonnes left American terminals, or approximately 12% of the country’s gas production for the month. Enough to dethrone Qatar, the largest exporter of LNG in 2022 and Australia, second that year, according to data from the American government.
Shale gas booming
And this is an ascension express. Indeed, from 2006, Doha took Indonesia’s first place as an LNG supplier…while the Americans only entered this market ten years later, in 2016. The cause: a boom “unconventional” hydrocarbons exploited in its subsoil, notably shale gas. Recovered from non-porous rocks via the injection of a fluid intended to crack them – a polluting process called hydraulic fracturing and banned in France since 2011 – this has increased the country’s total gas production. Which therefore jumped by 71% between 2009 and 2021, including 79% from shale gas this last year.
“The development of LNG intended for export can be explained by this massive exploitation of shale gas in the United States. From 2010, there was such a rise in power that it was necessary to find other more lucrative outlets than marketing on the domestic market alone, while prices in the territory remained very low,” explains Ahmed Ben. Salem, Oil and gas analyst at Oddo Bhf.
From then on, Uncle Sam’s country embarked on a rapid expansion of LNG liquefaction terminals on its coasts…at the same time as the Europeans and Asians set up, in mirror image, their own infrastructures regasification, in order to receive the precious molecule after its crossing of the Atlantic.
Depot and service the Freeport LNG
But it was the outbreak of the war in Ukraine that accelerated the process. Particularly on the Old Continent, largely deprived of the transport of this fuel by pipelines after the sabotage of Nord Stream, this vast gas pipeline linking it to Russia. Already in 2022, demand for liquefied gas by Europe had jumped by 153% compared to the previous year, the main suppliers being the United States, Qatar then Russia. According to the International Energy Agency, American LNG then increased from 5% of the EU’s total natural gas consumption to 20% between mid-December 2022 and mid-February 2023, while the share of natural gas Russian had fallen from 40% to 10% over the same period. Five countries drove demand, with 50% of volumes delivered: the Netherlands, the United Kingdom, France, Spain and Germany.
“As in previous quarters, the United States was the largest LNG supplier to the EU in the fourth quarter [de 2022]ensuring 13.2 billion cubic meters of EU LNG imports in a single quarter (for comparison: EU LNG imports from the United States accounted for 22.3 billion cubic meters over the whole of 2021). […] Year-over-year, LNG imports from the United States more than doubled. In 2022, the EU imported 56.4 billion cubic meters of LNG from the United States […] against 22.3 billion cubic meters in 2021 », thus pointed out the European Commission at the end of 2022. And to add:
« [Cela] implies that the target of the March 2022 EU-US Joint Statement on Energy Security, which predicted an increase of 15 billion cubic meters compared to 2021, has been significantly exceeded.
Unsurprisingly, in 2023, Europe remained the main destination for US LNG exports, with 5.43 million tonnes shipped in December alone (or around 7.5 billion cubic meters). An increase which is also explained by the complete return to service of the Texas LNG export plant Freeport, ravaged by a fire in 2022.
Fierce competition
Above all, the United States does not intend to stop there:
« Many LNG projects are under construction, others are waiting for the green light. All this is encouraged by a very competitive gas price locally: today, it is trading at $2.57 per million British thermal units (mmBtu) in the United States, compared to 9 to 10 dollars per mmBtu for American LNG sold in Europe. If we remove the costs of liquefaction and transport, we arrive at 6 or 7 dollars per mmBtu, a good margin », specifies Ahmed Ben Salem.
And European companies are supporting this strategy. Notably TotalEnergies, the world’s leading exporter of American LNG and the leading importer of LNG in Europe. The major even plans to accelerate: in June, it announced that it was joining forces with the American NextDecade and Global Infrastructure Partners to invest in the Rio Grande terminal project, a shale gas liquefaction plant in Texas . A month earlier, Engie also announced its intention to buy 1.75 million tonnes per year of liquefied natural gas (LNG) from NextDecade. A contract which will a priori run until 2041.
Be careful though: Qatar also remains in the race. Even if, in 2023, its global exports fell for the first time since 2016 (-1.9%), the peninsula “hasalso increases its abilities », points out Ahmed Ben Salem. “At the global level, there is a risk of being neck and neck with the United States”, adds the analyst. TotalEnergies also concluded two sales agreements in October to supply 3.5 million tonnes of LNG per year to France for 27 years. A week later, on October 18, Shell made the same announcement, with a contract lasting 27 years in the Netherlands.
And the public authorities are not slowing down this boom, quite the contrary. At the end of November, the German Chancellor himself signed a 15-year supply contract with the public company Qatar Energy and the American ConocoPhillips. 2.5 billion cubic meters of Qatari gas will be delivered each year across the Rhine from 2026.
“Fifteen years is very good, and the conditions seem really good. I would not be against contracts of 20 years or more,” Robert Habeck, German Minister of Economy and Climate, said at the time.
Finally, Moscow has not said its last word either. Even though France no longer relies on shipments by pipelinesits imports of liquefied natural gas transported by ship from Russia increased by 41% between January and September 2023 compared to the same period in 2021, the think tank IEEFA (Institute for Energy Economics and Financial Analysis) revealed in October . But the Americans are seeking to thwart its ambitions: at the beginning of November, the US State Department announced sanctions against the Russian LNG liquefaction plant Arctic LNG 2, preventing countries in Europe and Asia from buying it. gas when it begins to produce.
Too fierce an appetite?
Paradoxically, this all-out race is taking place in parallel with a reduction in gas demand forecasts in Europe. The cause: warmer than normal temperatures, high storage levels as well as a change in uses linked to the rise in energy prices. In France, for example, gas consumption fell to its lowest level in ten years in August 2023, according to Eurostat data, after a drop of 9% in 2022.
So much so that according to the IEEFA (Institute for Energy Economics and Financial Analysis), the 143 billion cubic meters of new LNG import capacity being planned in Europe until 2030 seems “ excessive “. And for good reason, these projects would bring capacity to 406 billion cubic meters, or almost three times the LNG demand forecast by the think tank for that year (150 bcm). Moreover, the International Energy Agency itself has revised downwards its European demand forecasts for 2023, with a reduction of 7% expected over the year.
The environment in the background
Furthermore, the rush for this fuel puts under the carpet a primordial question: that of preserving the climate, even though the European Union has positioned itself in favor of a gradual elimination of fossil fuels at the COP28 in Dubai, which ended last month. Especially since LNG emits more CO2 than its counterpart transported by pipeline, due to its liquefaction, its transport over long distances and its regasification.
Added to this is the fact that American shale gas, in addition to local pollution caused by hydraulic fracturing, promotes methane leaks, with an impact 80 times more warming than CO2 on a twenty-year scale. According to a Carbone 4 study published at the end of June, American gas emits 20% to 45% more greenhouse gases than Russian gas in terms of upstream emissions. No doubt: since the outbreak of the war in Ukraine,he decision-makers have given up on the environment in the face of the new priority in terms of energy: that of ensuring security of supply for Member States.
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