Some counterparties are stepping back from new projects as the role of LNG in the energy transition is reviewed. (Source: Shutterstock.com)
Investors are increasingly considering ESG factors before committing to invest in new LNG projects, analysts at S&P Global Platts and S&P Global Ratings said on March 24.
The net-zero LNG trade, which typically involves companies offsetting emissions, is expected to grow as the discussion on the energy transition to a carbon-neutral world gathers pace, they said. Net-zero trade arrived as a fledgling market to a 360 million tonnes LNG industry.
“It is almost surprising the prominence that ESG considerations have started to take in conversations,” lead analyst in the Energy Infrastructure Group of S&P Global Ratings Stephen Goltz said during a press briefing.
“It is not something that is just sitting with counterparties. To a certain degree it is also being influenced by the investment community as well,” he said.
RELATED:
Tellurian CEO: Natural Gas Must Fuel the Energy Transition
The comments come as governments and companies start to take action to reduce the LNG's industry carbon footprint.
Earlier this month, Russian energy giant Gazprom PAO delivered its first carbon-neutral shipment of LNG to Europe.
Cheniere Energy Inc., the largest U.S. LNG producer, said in February it will provide greenhouse gas emissions data associated with each cargo to customers beginning in 2022.
While LNG can produce about 50% less emissions than carbon-intense fuels such as coal, the demand destruction during the coronavirus pandemic has encouraged a shift from fossil fuels straight to renewables by some players.
Last October, the French government asked power group Engie SA to hold off on signing a multibillion-dollar U.S. LNG import contract on concerns over the environmental implications of the deal.
One month later, Danish shipping company AP Moller-Maersk A/S ruled out LNG investments, saying it will move straight to a CO₂-neutral type of fuel.
Some counterparties are stepping back from new projects as the role of LNG in the energy transition is reviewed. It is unlikely that all LNG projects that got permits will get off the ground, S&P Global Ratings’ Goltz said.
“It’s unclear to them how the market will look like in 20 years from now,” he said.
Recommended Reading
Constellation Bets Big on NatGas in $16.4B Deal for Calpine
2025-01-10 - Constellation Energy will acquire Calpine Corp. in a $26.6 billion deal, including debt, that will give the pure-play nuclear company the largest natural gas power generation fleet.
Summit Acquires Moonrise Midstream Assets to Alleviate D-J Constraints
2025-03-10 - A Summit Midstream Corp. (SMC) subsidiary will acquire Moonrise Midstream from Fundare Resources Co. in a cash-and-stock deal valued at $90 million.
DNO to Buy Sval Energi for $450MM, Quadruple North Sea Output
2025-03-07 - Norwegian oil and gas producer DNO ASA will acquire Sval Energi Group AS’ shares from private equity firm HitecVision.
Phillips 66 Buys EPIC’s Permian NGL Midstream Assets for $2.2B
2025-01-07 - Phillips 66 will buy EPIC’s NGL assets, including a 175,000 bbl/d pipeline that links production supplies in the Delaware and Midland basins and the Eagle Ford Shale to Gulf Coast fractionation complexes.
Nabors SPAC, e2Companies $1B Merger to Take On-Site Powergen Public
2025-02-12 - Nabors Industries’ blank check company will merge with e2Companies at a time when oilfield service companies are increasingly seeking on-site power solutions for E&Ps in the oil patch.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.