Market constraints imposed by Asian importers such as carbon limits and tariffs shouldn't interfere with long-term US LNG export growth goals as long as they are imposed in a fair and transparent way, Cheniere Energy's chief commercial officer, Anatol Feygin, said Sept. 8.
The comments during a streamlined virtual version of the annual Gastech conference come amid uncertainty over the drivers of global supply, demand and project investment heading into 2021 due to countries' differing environmental goals, the coronavirus pandemic and geopolitical concerns.
As the biggest exporter of LNG in the US --- and, before the pandemic, also the country's largest individual physical consumer of gas – Cheniere has a unique role in shaping how the energy transition in industrialized and developing nations impact liquefaction at home.
"As long as these rules are promulgated on a fair, open and transparent basis, we're very confident that LNG, and US LNG in particular, will have a seat at the table and will be part of a long term multi-decade solution," Feygin said.
From India, where gas consumption is expected to increasingly replace coal over time as long as needed pipeline and other infrastructure is built out, to China, where tariffs on US LNG imports have presented barriers to trade flows, there is a lot of attention on what will happen in the region in the future.
"There's a policy that the companies are committed to and the regulators are committed to, to increase the penetration of natural gas in the Chinese market to 15% and it is well underway," Feygin said. "LNG will be a key component of that as will additional pipeline supplies. Within that, there are a number or regulatory changes and constructs that are playing out like the creation of a nationwide pipeline grid, the issues of third party access to that infrastructure to regas facilities infrastructure. The LNG market has proven that it can adapt and react to these changes."
Better price transparency and more stable demand fundamentals will be key for the market to watch, Faisel Khan, chief financial officer for Sempra Energy's LNG unit, said during a panel discussion with Feygin. Sempra operates the Cameron LNG export facility in Louisiana and is also developing proposed liquefaction facilities in Texas and Mexico.
"We're quite optimistic on the growth and need of natural gas and LNG across the world for some time to come, especially in Asia," Khan said. "We see it eventually as competing with coal on a long-term basis both from a social cost perspective in terms of GHG emissions and even potentially on a price basis for a long time. I would say that the regulation is going to play a big part in how this transition happens and how quickly it happens."
In the near term, the market's ability to overcome the impacts of demand destruction from the coronavirus will continue to affect that transition.
"I think we have demonstrated again the flexibility and resilience of the industry," Steve Hill, Shell's executive vice president for gas and energy marketing and trading, said during a separate panel discussion.
