Dash to sell gas to Europe at high prices made the U.S. the biggest LNG exporter for the first time – article highlights:
U.S. natural-gas producers and global commodity traders are emerging as some of the biggest beneficiaries of the surging energy prices spreading pain in Europe.
Falling supplies from Russia to Europe, as well as the threat of a Russian invasion of Ukraine, have elevated prices of the coveted fuel used to heat homes and generate electricity. The rally has burned European utilities including Électricité de France SA and Germany’s Uniper SE and put dozens of British energy suppliers out of business. It is also leading to substantially higher bills for consumers, creating headaches for governments across the continent.
Europe’s gas crisis began to unfold in the fall and led prices to record highs on Dec. 21 of more than €180 a megawatt-hour, equivalent to $205. Vessels carrying American LNG to markets around the world set a new course for Europe, and in December the U.S. surpassed Qatar on a weekly basis to become the biggest LNG exporter in the world for the first time. In the following month, the U.S. supplied almost half of the record 11.7 million metric tons of LNG delivered into Europe, according to market-intelligence firm Kpler.
The crisis has also led European companies to reconsider signing longer-term deals for American gas, U.S. executives say, something many had eschewed because the fuel was often more expensive than the competition. Such deals, if consummated, could lock in demand and help American companies secure the financing needed to build more gas-liquefaction terminals, raising U.S. LNG export capacity.
American executives said some European officials have recognized a need to build facilities capable of receiving LNG and turning the supercooled fuel back into gas, so as to mitigate future price surges. They said that an EU proposal to classify certain gas investments as green will help more buyers to emerge.
“For the buyers in Europe to feel like there’s policy support and political support to do long-term contracts for gas, that’s very positive,” said Mike Sabel, chief executive of Venture Global LNG Inc.
Dan Brouillette, a former U.S. energy secretary in the Trump administration, said the recent surge of American gas shipments into Europe and signs of interest in building new gas infrastructure mark a turnaround. Mr. Brouillette is now president of Sempra SRE +0.66% Infrastructure, a unit of Sempra that is one of the owners of the Cameron LNG export terminal in Louisiana. He said cargoes have flocked to Europe because U.S. contracts are typically more flexible than those of other large LNG producers.