Canadian liquefied natural gas projects looking to fill gaps in the global market left by the absence of Russian gas may run into more challenging conditions than expected, industry experts have told a global conference in Vancouver.
They said the consensus among economists is that the gas shortage in Europe caused by the war in Ukraine is unlikely to last beyond 10 years, while the rise of renewables will cut into demand from 2030 onward.
Peter Abdo, chief commercial officer for LNG for German energy giant Uniper, told the LNG 2023 conference his company is committed to entering into 10-year contracts with potential suppliers B次元官网网址� but longer-term deals will be more challenging because of EuropeB次元官网网址檚 uncertain long-term demand for natural gas.
B次元官网网址淚 guess the caveat is, if any European player is entering into a long-term contract irrespective of the portfolio benefits, letB次元官网网址檚 just make sure that we have enough flexibility in that deal to where we can take it to Asia or some other market, in case weB次元官网网址檙e faced with a situation like stranded gas,B次元官网网址� Abdo said.
Octavio Simoes, president and CEO of U.S.-based natural gas firm Tellurian, agreed that the biggest opportunity opened by the European gas shortage is in Asia, a region with a much brighter long-term outlook in LNG demand.
However, Simoes said challenges remain on that front.
He told the conference that the current European gas shortage revealed a fundamental challenge for anyone wanting to sell LNG to Asia, as planned by projects in British Columbia B次元官网网址� price may be the ultimate determining factor, not environmental standards touted by the West.
Simoes said European countries such as Germany jumped into the LNG market in the last two years to replace Russian gas, paying more for the commodity and essentially B次元官网网址渢aking it from the rest of the worldB次元官网网址� while driving up prices.
He said high prices pushed Pakistan to abandon plans to buy natural gas and instead quadruple commitments to coal, and similar trends are happening in Indonesia, Thailand, Vietnam and the Philippines.
B次元官网网址淚 look at it from the principle that we have roughly half the (global) population B次元官网网址� 4 billion people B次元官网网址� living on less than $7 a day,B次元官网网址� Simoes said. B次元官网网址淪o whatever we do to decarbonize, if itB次元官网网址檚 not affordable, itB次元官网网址檚 not going to happen.B次元官网网址�
Earlier in the conference, LNG Canada CEO Jason Klein had said Canada would be competitive on the global market, partially due to its high environmental and social standards.
Klein said the $40-billion LNG Canada export facility in Kitimat, B.C. B次元官网网址� the only one of its kind to reach the construction stage on the Canadian West Coast B次元官网网址� is about 85 per cent complete and is scheduled to begin exports by B次元官网网址渕id-decade.B次元官网网址�
In a written statement, the $40-billion joint-venture LNG projectB次元官网网址檚 management said it does not comment on pricing and market conditions, but reiterated the facility will produce an affordable supply through B次元官网网址渉ighly efficient equipmentB次元官网网址� and B次元官网网址渁ccess to an abundant supply of low-costB次元官网网址� Canadian natural gas.
The CEO of multinational energy giant Petronas, which is backing LNG Canada, said Tuesday that he agrees pricing will play a big role as Asian countries decide whether to import LNG, switch to renewables or stay with coal.
But Muhammad Taufik told the conference that each market has unique dynamics, and Canadian LNGB次元官网网址檚 emphasis on environmental and social standards has a market in many Asian countries.
That demand will grow, he said, as governments around the world develop more concrete carbon-pricing policies, which would add more incentive for countries to buy lower-polluting fuels like LNG.
B次元官网网址淭hey will want this high-quality LNG,B次元官网网址� he told the conference. B次元官网网址淚 can tell you already that my marketing and trading team are already delivering B次元官网网址� or have already delivered B次元官网网址� carbon-neutral LNG, and there have been customers who are specifically asking for carbon-abated cargoes.B次元官网网址�
One such market would be China, said PetroChina InternationalB次元官网网址檚 senior vice-president Keith Martin.
Martin said Chinese President Xi JinpingB次元官网网址檚 announcement at the United Nations two years ago that China would achieve carbon neutrality before 2060 has set the worldB次元官网网址檚 second-largest economy strictly down the path of buying lower-emitting fuels such as LNG.
B次元官网网址淲hen President Xi made that speech at the UN, that wasnB次元官网网址檛 just a speech,B次元官网网址� Martin said. B次元官网网址淭hat was an order.B次元官网网址�
Muhammad Taufik said that comparing LNGB次元官网网址檚 costs and benefits as a whole, versus coal and renewables, may play to its advantage in Asia.
The key for LNG Canada and other Canadian projects, he said, is timing, making it imperative that production does not get delayed, thereby missing the window.
B次元官网网址淎 call-out to our Canadian friends: You do have probably one of the most unique opportunities to be part of the global solution,B次元官网网址� he said. B次元官网网址淵ou are just naturally positioned to cater to these markets, and I think it would be a huge opportunity lost if we do not pivot to actually respond to those needs.B次元官网网址�
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