The development assumes strategic importance for primarily two reasons, 1) an alternative to Russian energy supplies and 2) LNG is set to dominate the fossil fuel market in the near future and and companies are racing to get a dominant position in the market.
In a development that sees Qatar Petroleum and Exxon Mobil Corp pledging to sink in $10 billion for expanding a liquefied natural gas (LNG) export plant in Texas, both companies are rushing to meet the global demand for the fuel that is going to replace their dirty cousin petrol and diesel in the near future.
Construction of the Golden Pass LNG project in Sabine Pass, Texas, is expected to begin early this year. The project will add production capacity of around 16 million tonnes of LNG per year after it starts up in 2024.
“Golden Pass will provide an increased, reliable, long-term supply of liquefied natural gas to global gas markets, stimulate local growth and create thousands of jobs,” said Darren Woods, Exxon’s CEO, of the final investment decision.
Woods and Qatar Minister of State for Energy Affairs Saad al-Kaabi signed the deal at the Four Seasons hotel in Washington in the presence of U.S. Energy Secretary Rick Perry.
The deal is proof that two of the world’s top energy producers can work together and “support rather than subvert an open energy marketplace,” said Perry.
Incidentally, the Trump administration has promoted gas drilling and LNG exports in part to offer European customers alternatives to piped natural gas from Russia; it has also cut down on Obama-era environmental regulations on energy operations.
“To understand how critical this is, imagine how Europe feels when the winter winds begin to blow and Russia has its hand on the pipe valve,” said Perry.
Worldwide consumption of LNG is expected to more than double to 550 million tonnes a year (mtpa) by 2030; this has triggered a race among oil and gas companies who are eager to dominate the market.
While Exxon has a 30% stake in Golden Pass, Qatar Petroleum has a controlling 70% stake. The two have been strengthening a global alliance across LNG projects from the United States to Mozambique.
Exxon has signed an agreement to buy a 12.4 percent interest in the existing terminal and a pipeline from ConocoPhillips, and the purchase is subject to regulatory approvals, said both companies.
The expansion is part of Qatar Petroleum’s plans to invest about $20 billion in the United States as the company seeks to increase its overseas oil and gas business.