Qatar plans to increase its carbon-dioxide sequestration capacity to 11 million tons within a few years, which, combined with the use of solar power at its LNG plants, should give it the lowest carbon footprint in the industry globally. gas industry are taking steps to maintain a competitive edge in this area. The next front in the U.S.-Qatar battle will be which producer can offer the most environmentally friendly, sustainable LNG – volumes with the lowest carbon footprint. LNG contracts offer more flexibility and less exposure to price risk. That makes the choice easy for many LNG buyers who appreciate that U.S. That can be unsettling, especially as oil prices recently surpassed $80 a barrel again. Qatar prefers to price LNG against the traditional oil-linked LNG benchmark, meaning its prices are exposed to the volatility of global oil markets and the whims of the OPEC cartel. Even with a scorching heat wave hitting the country, Henry Hub prices are still at a paltry $2.50 per MMBtu. benchmark Henry Hub gas prices, which have generally been around $2 per million Btu for years due to the vast natural gas reserves and production of America’s shale rock formations. This cost-plus formula is linked to the U.S. LNG pricing models are also more favorable to many buyers. It requires firm destinations for its cargoes, a strategy that helps optimize Qatar Energy’s large shipping fleet and prevents Qatari cargoes from competing with each other on the open market. Qatar does not offer the same flexibility. America’s “destination free” contracts allow LNG buyers and traders to take cargoes anywhere in the world – typically to the highest bidder where gas is most in demand – rather than limit them to a single destination. producers have some key advantages in supplying global LNG markets, chiefly flexible contract terms and the competitive landscape among project developers. The locations of existing and planned U.S. New LNG contracts placed this year total 30 carriers with a value of $7.7 billion. Investment in new LNG carriers since the beginning of 2022 represents 27% of total spending on new ship building and more than any other sector including containerships, according to the trade publication Seatrade Maritime. expansion projects from the drawing board to reality. Buying commitments from European importers has been critical to getting new U.S. Europe last year became the world’s “premium” LNG market, paying high prices for LNG shipments, drawing them away from Asia. alleviate a potential gas crisis, bringing into the LNG market another huge buyer to compete with Asia. Europe, which has turned to LNG to fill the void left by Russian gas, accounted for 70% of U.S. The Ukraine war and Russia’s subsequent cutoff of piped gas to Europe have been a boon to American LNG developers. Other potential projects in the queue include Energy Transfer’s Lake Charles LNG, Venture Global’s Calcasieu Pass 2 LNG, and New Fortress Energy’s “Fast LNG” concept. There is still a chance of more new projects this year as developers ride favorable winds in the global gas markets. These include Venture Global’s Plaquemines LNG, Sempra’s SRE Port Arthur LNG, and most recently NextDecade’s Rio Grande LNG. That’s nearly equal to Qatar’s mega-expansion projects. LNG export developers have finalized investment decisions (FIDs) in three expansion projects so far this year that would add about 44 million tons of LNG capacity annually.
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