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The LNG market will continue to see volatility until there is new supply, TotalEnergies CEO Patrick Pouyanne said on Tuesday at a Wood MacKenzie Gas and LNG Future of Energy Conference.
In the longer term, “from 2026, 2027 we will have more margin to read the price,” Pouyanne said.
Some may look at the LNG market as in a state of status quo after Europe was able to secure enough gas in storage to fill its facilities to 99.49 percent. This does manage to insulate Europe from typical supply shocks seen in the winter months, and most view Europe’s position as one that will allow them to avoid the high prices of last year after Russia invaded Ukraine.
For Total, the state of the LNG market is critical, managing half of the global LNG market, according to Pouyanne. The U.S. LNG market is critical to the oil company’s portfolio as it shuffles cargoes between Europe and Asia.
Last month, TotalEnergies managed to secure two long-term LNG agreements with QatarEnergy, in which Qatar will supply up to 3.5 million tons per year of LNG to France for 27 years beginning in 2026 and running to 2053. TotalEnergies is a minority partner in Qatar’s North Field East and North Field South expansion projects, from which the LNG for the France deal will be sourced.
Despite those deals which are years out, LNG prices will continue on their volatile trajectory until new supply beyond what is available today is available to the market. Prices are still reasonable, Pouyanne argued, compared to LNG prices in 2022.
“Prices are volatile…Because we have very little margin (between) supply and demand system,” Pouyanne added.
According to its website, TotalEnergies is focusing on gas to meet the “growing energy demand worldwide while helping fight climate change,” adding that it is the world’s No. 2 in LNG.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.