Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
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
Activity Offshore Norway Expected to Remain Steady in 2024
2024-01-11 - The Norwegian Offshore Directorate provided updates on 2023 activity, including 14 wildcat discoveries and eight projects going online and urging exploration in frontier areas.
E&P Highlights: Jan. 12, 2024
2024-01-15 - Here’s a roundup of the latest E&P headlines, including an SLB-Nabors collaboration and new contract awards.
E&P Highlights: Jan. 8, 2024
2024-01-08 - Here’s a roundup of the latest E&P headlines including the second biggest deepwater gas find of 2023 and new contract awards.
Prairie Operating Acquires More D-J Basin Assets for $94.5MM
2024-01-15 - Houston-based Prairie Operating Co. is scaling its D-J Basin footprint with a $94.5 million acquisition of Nickel Road Operating LLC.
ONGC’s M Field Starts Production in Bay of Bengal
2024-01-09 - ONGC’s M Field represents the second phase of the larger 98/2 Block development project which is expected to reach peak production of 45,000 bbl/d and 10 MMcm/d.