Chevron is holding talks on long-term contracts to supply liquified natural gas (LNG) to clients in Europe, reported Reuters, citing an executive of the US oil and gas company.
Since consumers in the region anticipate depending on LNG imports for a longer period than originally expected, the energy company is negotiating agreements for up to 15 years.
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Following the rollback of various green initiatives by some European governments, who cited greater costs and economic concerns, buyers have shown a willingness to sign long-term supply deals.
After Russia suspended pipeline gas exports following Moscow’s decision to invade Ukraine last year, the LNG imports have increased in Europe.
Initially, buyers explored short-term LNG supply deals of up to five years as the market was unstable and European nations wanted to wean themselves off fossil fuels.
Speaking to the publication, Chevron head of trading, shipping and pipeline operations Colin Parfitt said that the stance has now changed as the emphasis on securing energy supply has grown.
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By GlobalDataParfitt noted: “After Russia-Ukraine, the initial thoughts we were getting out of Europe were ‘we only want LNG for a short period of time because of the energy transition’. What I have seen happening in the last year is that lengths of contracts customers are willing to sign have been extended.
“European customers want medium-term deals in the up to 15 years space and we are working on some commercial deals.”
With the current shale boom, the US has emerged as a significant LNG exporter, and Chevron will supply the majority of the LNG from the country.
Parfitt stated that the European market appeared to be well-supplied in the short run, ahead of winter.
“In the short term European gas looks well supplied, softer than last year but with risk of volatility if you get a cold winter in Europe, cold winter in Asia, risks to supply as well as geopolitics.”
In the last month, France’s TotalEnergies, UK’s Shell and Italy’s Eni each signed 27-year LNG supply deals with QatarEnergy.
