Brussels, (Brussels Morning) The French government has called on the Engie electric utility company to hold off on signing the contract for import of liquefied natural gas (LNG) from the US because of environmental concerns, according to an unnamed source cited by Reuters yesterday, Thursday.
The move comes amidst growing unease about shale gas extraction, especially where US producers are concerned, and the environmental impact. There are also broader trade disputes between the EU and the US, including retaliatory measures over planned taxation of tech giants.
Engie’s contract with the US NextDecade LNG company is worth some US$7 billion, according to Politico and La Lettre A. The NextDecade is looking to build a LNG export plant in Texas as it negotiates agreements with potential customers.
The French Ministry of Economy and Finance is urging that the agreement be called off, the Reuters source said, observing that the project is not in line with France’s environmental plans, given that Engie is partly owned by the French state. Engle’s board decided in late September to delay the signing in order to take more time to examine the contract in detail. French and US environmental activists have welcomed the delay.
Height Capital Markets analysts pointed out that the delay may have been motivated by trade concerns. Recently, The NextDecade announced it had developed processes that can reduce the planned LNG export plant’s greenhouse gas emissions. It also postponed final decision on whether to invest in the LNG plant in Rio Grande City in Texas from this year to next, a reaction to coronavirus-imposed lockdowns which have cut down global demand for gas.
Earlier this month, the French government announced plans to stop providing export guarantees to gas projects in 2035 and to oil projects in 2025.
The EU is the largest gas importer and the US is looking to increase its gas exports to the bloc, competing with cheaper Russian gas arriving by pipelines, a rivalry that has sparked tensions between Washington and Moscow.
The US imposed sanctions on the Nord Stream 2 pipeline project claiming that Russia is using energy sources for coercive purposes. Russia accused the US of resorting to sanctions to promote its LNG exports and claimed that this amounted to unfair competition.