French energy major TotalEnergies is expecting to see an emerging gap in LNG supply from mid-2023 as European demand continues, Russian pipeline gas shrinks further and on the back of the possible revival of the Chinese economy.
Presenting annual results for 2022 and record profits of $36.2bn, TotalEnergies chairman and chief executive Patrick Pouyanne said that in 2022 European gas import demand grew to 115 million tonnes (mt) of LNG equivalent compared to 67 mt a year earlier.
In contrast, Russian pipeline gas imports crashed back to 44 mt of LNG equivalent from 100 mt in 2021.
For 2023, he said TotalEnergies estimates that Russian pipeline gas imports will fall further to around 20 mt of LNG equivalent while Europe will need more LNG imports which are forecast to be around 130 to 140 mt.
But Pouyanne said LNG supply is only expected to grow by around 10 mt during 2023 to 410 million tonnes per annum globally and there could be more demand from China during 2023 as the country emerges from its lockdown.
He said this could swallow up part or all of the extra 50 mt of LNG which Europe imported in 2022.
The CEO pointed out that gas storage levels are currently high at around 85% in Europe but said this gas will be consumed.
“We think that some tensions will emerge by the middle of the year between the different markets for LNG,” Pouyanne said.
Asked about developing new LNG projects, Pouyanne said: “We like LNG. LNG is good.
“LNG is a way to decarbonise the coal-fired power plants in Asia”
He admitted the company is investigating new US LNG projects.
On TotalEnergies’ “on ice” Mozambique LNG project, Pouyanne revealed he spent a low-key day in Cabo Delgado on Friday 3 February — just three people in two cars, he said — to assess the situation on the ground for himself.
For Mozambique LNG — for which 17 LNG carrier berths have been reserved at two shipyards — Pouyanne said he wants a clear view on human rights issues and is waiting for a report on these and said the company will need to re-engage with contractors on the project.
He said if the company sees the costs rising it can wait. “No hurry,” he said.
Pouyanne said the company has been adding regasification capacity and now controls 20-mtpa in Europe, giving it about a 15% market share.
He highlighted the company’s interest in the new Deutsche Ostsee floating storage regasification unit-based terminal at Lubmin in Germany where TotalEnergies has taken half the capacity.
The company is aiming to fire up its new French FSRU-based terminal at Le Harve, which will use the 145,000-cbm regas unit Cape Ann (built 2010), by the third quarter of 2023 where the CEO said it also intends to book 50% of the capacity.
On Russia, Pouyanne said TotalEnergies is committed to taking its 4-mtpa of long-term volumes from the Yamal LNG project, where it was a founder shareholder. But otherwise is not taking other spot cargoes from it.
Answering questions Pouyanne revealed TotalEnergies is looking at developing synthetic LNG or e-methane projects in the US, along with carbon capture and storage (CCS). He said the key on CCS will be the size of the market.
