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France’s government has asked local power group Engie, in which it holds more than 20 percent, to delay the signing of a 20-year deal worth US$7-billion to buy liquefied natural gas (LNG) from a planned export project in Texas due to concerns over gas production emissions, Politico reported, quoting sources with knowledge of the issue.
Engie was preparing to sign the multi-billion offtake deal with NextDecade Corporation, which is developing the Rio Grande LNG project in Texas. Rio Grande LNG, whose final investment decision is expected in 2021, is supposed to use the abundant shale gas supply from the Permian Basin and Eagle Ford Shale.
But the French government has asked Engie to hold off on signing the deal because France is concerned that the shale gas producers in Texas emit too much methane at a time when the European Union (EU) and its major economies, including France, are looking to develop and import clean energy.
Gas flaring in Texas is also a problem, especially for environmentally conscious investors. Last year, flaring hit a record in the Permian, not least because of a shortage of pipeline capacity that could have accommodated the associated natural gas during oil production.
NextDecade said earlier this month that it had developed proprietary processes using proven technology to reduce carbon dioxide equivalent (CO2e) emissions at its proposed Rio Grande LNG facility by around 90 percent. The company is also exploring options to address the remaining emissions to enable Rio Grande LNG to achieve carbon-neutrality.
NextDecade has a 20-year contract with Shell to supply it with two million tons of LNG per year from the Rio Grande LNG project. But the U.S. LNG developer needs more commercial agreements before it can reach a final investment decision next year.
The Engie-NextDecade deal is not definitively canceled, reports say. For now, it is just delayed.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.