The energy markets are confused about how the future will look and confused about the timing of the future (or futures), notes Small LNG Shipping principal, Eduardo Perez Orue, reports Riviera.
The need for natural gas today to generate enough electricity with relatively low carbon emissions. The supporters of a quick change to renewables believe we will not need LNG, coal, or nuclear in 5 or 10 years. Moving from today’s energy mix to full renewables is not feasible in most parts of the world, whatever the politicians and well-intended customers think.
Shell’s chief executive’s new strategy sees a long-term future for natural gas. Shell has its interest in guaranteeing the profitability of its assets, but in recent declarations, he has stated they see LNG playing a long-term role in the global energy mix and is planning no production cuts until well after 2030. Interestingly enough, after those declarations, Shell boosted its dividend by 15% as it pivoted back toward oil and gas.
At the same time, the Japanese Institute of Energy Economics has warned Europe of being too optimistic about the role renewable energies will play in the future in the European energy mix. Moving too fast towards renewable energy might cause massive problems in the continent in the medium term. Not only because of the inherent risks of putting all the eggs in one (or two) baskets or even relying completely on technologies that still have to prove they can sustain long-term growth but also because that might mean the Continent would reduce its weight in the international LNG market and will not be able to guarantee supplies as easily as it did during the Ukrainian invasion in case of a new crisis.
In the meantime, the Chinese have decided to act instead of talking and ENN of China has just signed a 20-year LNG supply contract with US-based Cheniere.
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