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ArcelorMittal, the world’s second-largest steelmaker, is looking to sign an agreement with a U.S. LNG exporter as it aims to secure stable supply of natural gas following last year’s energy crisis in Europe, the Financial Times reported on Tuesday, quoting sources with knowledge of the plans.
Industrial giants in Europe have recently signed LNG supply deals with U.S. companies after the industry was forced to curtail or shut down operations last year as natural gas prices skyrocketed in the wake of the Russian invasion of Ukraine.
Europe’s heavy industry suffered a lot in 2022 and continues to see much higher energy costs than American industrial firms despite the fact that European energy prices have declined from the record highs of the summer and autumn of 2022.
In September last year, ArcelorMittal shut one of its two blast furnaces at its steelworks site in Bremen, Germany, due to the “exorbitant rise in energy prices.”
The high energy prices are undermining the competitiveness of steel production and the company is taking this step in Germany because it cannot operate all plants economically, ArcelorMittal said at the time.
Since the peak of the energy crisis, some major European companies have turned to U.S. LNG supply which is more flexible in terms of reselling than supply from America’s competitors.
For example, INEOS signed in December 2022 a 20-year contract with Sempra Infrastructure for the supply of around 1.4 million tonnes per annum (mtpa) of LNG from Phase 1 of the Port Arthur LNG facility under development in Texas. First deliveries are expected in 2027.
German giant BASF signed earlier this year a deal with Cheniere Energy to buy up to 0.8 million tonnes per annum of LNG from Cheniere Marketing. Deliveries are expected to begin in mid-2026 and continue through 2043.
ArcelorMittal, for its part, hasn’t made a decision yet on the duration or structure of a potential LNG supply deal as the search is in its early stages, FT’s sources said.
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.