Gas Demand Will Continue, Projects May Slip: ExxonMobil

Demand for gas is growing steadily, but some projects might slip in the current circumstances, Alex Volkov, vice-president Global LNG Marketing at ExxonMobil, told the Gastech virtual summit September 7. But he was in no doubt there will be a recovery in demand, and pointed to China where it was already under way. Its first-half LNG imports were about 7% higher than in the same period 2019 and similar patterns could be seen elsewhere in Asia, such as Taiwan and Singapore, he said.

Projects can become cheaper, which will make gas more attractive still for customers, he said. He did not comment on any of his own company's projects, such as the likelihood of a final investment decision this year on its Rovuma LNG project in Mozambique. And LNG remains a long-term business where relationships are still important, he said.

Also on the virtual panel was Venture Global's co-CEO Mike Sobel, who said that the price of gas was key to encouraging the shift away from coal. He argued vigorously against any form of carbon tax or tax on methane emissions as this might threaten the attractiveness of gas and so slow down the energy transition. He appeared to have his cake and ate it, maintaining both that today's low prices would make gas more attractive than other forms of energy while also that companies would happily sign long-term offtake agreements.

Total's head of gas, Laurent Vivier, agreed that LNG projects might become cheaper in today's environment, but nevertheless they do require a lot of capital and strong balance sheets, he said. Even if offtake contracts are shorter and more flexible, moving from 20 years to 10 or 15, the infrastructure still takes a long time to pay back, and this is why the majors are still needed for traditional projects.

Small companies have higher capital costs and although they have a role in small scale LNG and floating storage and regasification they are not equipped for big liquefaction projects. He acknowledged however the need to be humble, given the progress made by Venture Global in moving its projects forward, based on Henry Hub gas and low-cost modular LNG trains.

Vivier said that Total had in the last year taken investment decisions on two major LNG investments – Mozambique LNG and Arctic LNG-2 in Russia – which he said were justified by the company's long-term view of gas demand growth. The energy transition will happen at a different pace in different countries, he said: "Let's not oversimplify, not every country is OECD." For much of the world's energy demand, reliable and low-cost energy meant a good future for gas.