Energy major Chevron has decided not to invest in the construction of a US LNG plant, choosing instead to focus on selling its gas directly to the market, reported Reuters.
The company’s midstream head, Colin Parfitt, confirmed that Chevron can effectively monetise its US gas without the need for conversion to LNG, given the country’s extensive midstream market.
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In an interview, Parfitt said: “We chose not to do the owning and operating but we do deals that allow us to have production of gas in the US and translate it into LNG for our customers.”
Parfitt added that Chevron would not take an equity stake in Woodside Energy‘s potential acquisition of Driftwood LNG in Louisiana.
Woodside is reportedly open to selling up to a 50% stake in the Driftwood project, which is expected to produce 27.6 million tonnes per annum (mpta) of LNG.
Chevron’s strategy in the US LNG market involves SPAs with LNG developers rather than direct investment in infrastructure.
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By GlobalDataThe company has existing agreements with Cheniere Energy and Venture Global LNG, the latter of which has experienced contract disputes with major customers.
“I have sat with Venture Global in the past and I am very well aware of the noise that is out there. Our view is if we have an issue with a supplier then we talk to them and we do talk to Venture Global very directly,” Parfitt was quoted as saying.
The industry faces challenges, as large projects often encounter delays.
Parfitt also highlighted the impact of the Biden administration’s pause on export reviews, which has stalled LNG export approvals to countries outside of free trade agreements.
This pause is likely to slow the progression of upcoming LNG projects.
The backdrop to Chevron’s decision includes recent criticism from CEO Michael Wirth towards the Biden administration’s stance on the natural gas industry.
Wirth emphasised the importance of natural gas from the Permian Basin in supporting the growth of AI technologies.
Wirth’s comments came in response to new government initiatives aimed at preventing AI data centres from undermining US climate objectives.
The White House recently established a task force on AI data centre infrastructure to align policies with the nation’s economic and environmental ambitions.
