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ConocoPhillips has inked a 15-year LNG supply deal with Netherlands-based Gate Terminal that would expand Conoco’s gas presence in Europe by 1l.5 million tons in regasification capacity annually.
The deal will become effective in 2031 and will boost LNG supply for the Netherlands and Northwestern Europe from that year onwards.
It is the latest example of a deepening EU divergence between words and actions. While Brussels and national government officials cheer their new independence of Russian gas and reduced dependence on hydrocarbons in general, thanks to a buildup in wind and solar, companies quietly sign deal after deal for long-term natural gas supply.
Conoco was part of one such deal closed last November, for deliveries of Qatari LNG to Germany’s brand-new LNG import terminal in Brunsbüttel. Cheniere Energy also recently signed a long-term LNG supply deal with Germany’s chemicals giant BASF.
This may be only the beginning of a wave of long-term supply deals for the continent as the realization that wind and solar can’t do the job of gas sets in. Indeed, the very presence of long-term deals at all is sign enough that the realization is setting in. Previously, European gas buyers were not big fans of long-term purchase commitments at all.
Until last year, Europe was actually a fan of the spot LNG market. That was when its intake of LNG was minuscule compared to current import rates, and LNG prices were low thanks to all the large-scale projects that had come online within a short time.
Now, with almost no Russian gas, Europe needs all the LNG it can get to keep its head above the surface. Prices on the spot market can easily become unpalatable in this situation, hence the newfound European appetite for long-term commitments. Just when the IEA’s Fatih Birol said natural gas demand was about to peak soon.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.