Shell and Total raise concerns about the timing of a new global LNG supply
Shell and TotalEnergies are the two world's largest LNG traders. They said that the timing of the new LNG projects around the globe is still in flux. This could lead to uncertainty regarding long-term supplies.
The construction costs of new LNG projects have increased due to rising tariffs. U.S. LNG suppliers are attempting to renegotiate contracts to cover these costs. Some large LNG projects, such as those in Mozambique, are also being delayed because of security concerns.
"Supply Growth on the Horizon and these Timings are Uncertain" Shell CFO Sinead Gorman said on a press call that she had seen these moves quite a number of times in the past.
HIGHER CONSTRUCTION AND FINANCING COSTS
By 2030, the International Energy Agency estimates that global LNG net supply will increase by 184 millions metric tons annually.
Pouyanne said on a call with analysts that there were many announcements. But all of these projects would need to be financed, and not just any financing.
Pouyanne stated that NextDecade had been able to make a final decision on Rio Grande LNG Train 4 due to a 6.5% competitive financing rate. However, Sempra has postponed Cameron LNG’s fourth processing facility because of too high capital expenditure costs. Total’s Papua LNG will be revised to reduce costs.
Shell sees a balanced LNG market in 2026
Shell CEO Wael Sawan said in a conference call held on Thursday that he believes the LNG market will be balanced by 2026. Shell is bullish about LNG prices in the long-term, said Sawan.
We're looking into new supply projects, and what this means for the complex as a whole in the later part of the decade. Sawan noted that the transportation sector continues to show positive signs, with a particular focus on marine and trucking LNG demand.
Shell anticipates that global LNG demand will grow 60% by 2040. It wants to increase its LNG sales 4%-5% per year for the rest of this decade. Shell sold 65 million metric tonnes of LNG last year.
TotalEnergies has sold 30 million metric tonnes of LNG so far this year. On Thursday, it said that the price for European gas would remain at $11 per MMTBU through the winter.
The finance chief for Norway's Equinor said that the European gas market is tighter this winter than most people think.
Equinor has lowered its long term gas price forecast to $8 per MMBTU by 2030, from $9 per MMBTU. This is due to its expectation of new volumes entering the market. (Reporting and editing by Susan Fenton, Jan Harvey and Shadia Nasralla)
(source: Reuters)