GASTECH-China-Russia pipeline plans do not affect Asian demand for US LNG, according to Venture Global CEO

According to Michael Sabel of Venture Global LNG (the second largest U.S. LNG exporter), recent gas agreements between China, Russia and other countries are unlikely to affect Asian demand for U.S. LNG.

China, which is the largest LNG importer in the world, signed agreements on September 2 for a boost of gas supply via the existing Power of Siberia pipe and to build Power of Siberia 2. This has raised concerns that it could reduce China's appetite to import LNG.

Sabel said on the sidelines at the Gastech conference, in Milan: "Don't be distracted by the short-term impact of politics. We're investing to build things that are going to last for 50 years."

The demand for SPAs (Sales and purchase agreements) is as high as it's been at Venture Global over the past 10 years. "It's very strong at the moment."

Venture Global anticipates that Europe and the emerging markets of Southeast Asia will continue to be a source of demand.

He said that Europe is severely short of capacity to produce electricity. I think that data centres will be a major source of incremental demand. But you are currently short on gas production capability."

Sabel stated that, as Asian economies grow, they will switch electricity generation from coal and nuclear to gas along with renewables, increasing the gas demand.

Sabel dismissed the idea that a glut of gas would lead to lower prices. Sabel said that Qatar's increased output benefits developing Asian countries by providing affordable gas.

He said: "Venture Global does not subscribe to the idea that oversupply is causing a price compression." QatarEnergy’s North Field extension is expected to increase output from 77 to 126 millions metric tons annually by 2027.

Qatar is a major supplier of fuel to developing countries. India and Bangladesh form part of their portfolio. It's great that these markets have access to the same fuel prices as Europe, the United States, South Korea, and China."

Venture Global won the legal battle in August against Shell for failing to deliver LNG under long-term agreements starting in 2023. BP, Edison, and Galp filed arbitration claims for 2023 accusing Venture Global that it profited from the sale LNG on the spot-market while failing to deliver their contracted cargoes out of the Calcasieu Pass Export Facility in Louisiana.

Sabel refused to comment on specific proceedings but stated that "the contracts and facts surrounding the facility are the same."

He said, "They're the same standard industry contracts...with small differences but nothing substantial."

Sabel stated that Venture Global would continue to offer competitive LNG pricing compared with other U.S. competitors who are developing projects.

The price of commodities with demand is ultimately determined by the replacement cost.

(source: Reuters)