Recent gas agreements between China and Russia are unlikely to weaken Asian demand for U.S. liquefied natural gas (LNG), according to Michael Sabel, CEO of Venture Global LNG, the second-largest U.S. exporter of the fuel.
China, the world’s largest LNG importer, signed deals on September 2 to boost gas supply through the existing Power of Siberia pipeline and to build the Power of Siberia 2, raising concerns in that this could displace China’s appetite for imported LNG.
“Don’t get too distracted by short-term political impacts, because we’re making investment decisions to build things that will be around for 50 years,” Sabel told Reuters on the sidelines of the Gastech conference in Milan.
“SPA (Sales and Purchase Agreements) demand is about as strong as we’ve seen it at Venture Global in the last 10 years. It’s very, very strong right now.”
Venture Global expects continued demand from Europe and emerging markets in Southeast Asia.
“Europe is extremely short of electricity production capacity,” he said. “I think data centres are going to be a massive source of new incremental demand, but you are short today on gas production capacity.”
Sabel said that as Asian economies develop, they will shift electricity generation from coal to gas, along with nuclear and renewables, increasing gas demand.
Sabel dismissed concerns that oversupply would lower prices. He said that Qatar’s additional output benefits developing Asian economies by offering affordable gas.
“Venture Global is not a subscriber to the view that there’s a certain price compression coming from oversupply,” he said. QatarEnergy’s North Field expansion is set to raise output to 126 million metric tons per year by 2027, from 77 million now.
“Qatar is a great supplier to the developing world. India and Bangladesh are part of their portfolio, and that’s a great thing for these markets to have access to cost of fuel that Europe and the United States have, or South Korea and China have.”
In August, Venture Global won a legal battle against Shell over its failure to deliver liquefied natural gas under long-term contracts starting in 2023. Other companies, including BP, Edison and Galp, filed arbitration claims from 2023, accusing Venture Global of profiting from the sale of LNG on the spot market while not providing them with their contracted cargoes from the Calcasieu Pass export facility in Louisiana.
Sabel declined to comment on individual proceedings, but said that “the contracts are all the same, the facts around the facility are all the same.”
“They are the same industry-standard contracts… with small differences, but nothing material,” he said.
On its LNG price offerings compared to other U.S. rivals who have projects under development, Sabel said Venture Global will continue offering competitive LNG prices.
“Ultimately, the price in commodity markets with demand gets set by replacement cost.”
(Reporting by Marwa Rashad, Francesca Landini and Emily Chow, Editing by Louise Heavens)