Engie, NextDecade Stop US LNG Deal Talks

French utility Engie has ended talks with US project developer NextDecade over an LNG purchase contract they had been negotiating, it told NGW November 4.

It did not comment on the reason, or say whether it had been instructed not to import LNG from the US by the French government, which is a 24% shareholder. However the abrupt termination without any explanation does not rule out intervention. 

Reports had been circulating for some weeks that the contract was not welcomed by the French government, which has banned hydraulic fracking on its own soil. The government also has net zero carbon aspirations. But as a free-on-board offtaker, Engie would have been able to deliver the LNG anywhere it had assets or customers. And NextDecade, which is yet to take a final investment decision, had said that it would make the plant almost completely emissions-free.

Engie said it had never commented on the volume it would buy, although the 20-yr contract had been valued in the press at $7bn and it would have been linked to Henry Hub prices, if it were like existing US LNG export contracts.

The cancellation leaves a hole in NextDecade's plans to take FID next year, as low energy demand means there is already more LNG except at peak times of the year than the market needs. But it will need contracts for a good proportion of the total if it is to secure financing. It had been planning a 27mn metric tons/yr plant, coming online in phases.

A US senator had urged Engie to press ahead with the deal in order to protect its environment and to bolster US-France trade. France relies heavily on nuclear energy for its power, giving it a head start in lowering carbon emissions. It is also a buyer of pipeline gas and of LNG from a range of sources.