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The energy transition Oil supermajors’ mega-bet on natural gas-https://www.economist.com/business/2021/04/18/oil-supermajors-mega-bet-on-natural-gas.............. "Is the least grubby hydrocarbon a bridge fuel to a greener future, or a trap?"........"What is more, a growing spot market and shaky demand have made LNG buyers less interested in traditional long-term contracts. At least a quarter of LNG supply is now uncontracted, estimates Mr Di Odoardo. As approved projects come online, the share of uncontracted LNG may exceed 50% by 2030..............All this is prompting some in the industry to rethink their embrace of gas. Last July Dominion Energy, an American utility, cancelled plans for a controversial pipeline and sold its entire pipeline business to Berkshire Hathaway, a huge conglomerate, for $9.7bn. In November Engie, a French energy company, scrapped plans to sign an LNG contract with NextDecade, an American firm, over concerns about shale emissions. Other firms are trying to adapt to a gas business that looks set to grow both more competitive and more complex..........Big players are now applying a higher cost of capital to their hydrocarbon investments, notes Mr Della Vigna, with a greater focus on profitability. Scale is turning to their advantage, too........... Take Shell. The company’s share of gas production actually fell in recent years, as it sold off less profitable gas assets in America and Nigeria. Mr Wetselaar maintains that Shell is well positioned to deal with the market’s new realities. Unlike smaller players, which depend on long-term supply contracts to attract financing for new projects, Shell can use its balance-sheet. Trading capabilities make it easier to sell LNG to diverse buyers. For those who want zero-emissions energy, Shell has already sold ten “carbon neutral” LNG cargoes, paired with offsets............ Total, another European oil major, plans to double its LNG sales over the coming decade, while touting its plans to reduce methane emissions. ExxonMobil reckons that its new investments in CCS will both limit emissions and support its traditional business............. Such plans are unlikely to sway those who want investment in all fossil fuels to plunge. Companies’ plans can be disrupted by any number of forces—in March an attack in Mozambique prompted Total to suspend a giant LNG project there. The changing market means only the most profitable, safe projects backed by the strongest firms are likely to move forward................. NextDecade, having failed to secure Engie as a customer, has postponed a final investment decision on one proposed facility in Texas and scrapped another. It had sought to build an LNG import terminal in Ireland, too. In January Irish officials let a preliminary agreement with NextDecade expire. Gas may not quite be over. But the industry may increasingly be defined not by the projects that advance but those that do not." |
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