Chevron is currently in discussions to secure contracts for supplying liquefied natural gas (LNG) to Europe for up to 15 years. Buyers in Europe are leaning towards longer-term agreements, signaling a shift in the region’s reliance on imports for an extended period, according to a senior executive at the American oil and gas company.
The renewed interest in long-term supply contracts by buyers comes as several European governments have scaled back certain green policies due to rising costs and economic concerns. European gas imports saw a surge, primarily driven by Russia’s suspension of gas exports via pipelines following the Ukraine conflict last year. Initially, buyers sought short-term LNG supply deals, lasting up to 5 years, due to market uncertainties and nations’ ambitions to reduce dependence on fossil fuels.
Colin Parfitt, Head of Trading, Shipping, and Pipelines Operations at Chevron, stated that there has been a shift over the past eighteen months from short-term and immediate supply deals to long-term commitments as Europe increasingly focuses on securing energy supplies.
Parfitt pointed out that initially, Europe appeared interested in LNG for only a short duration due to its energy transition goals. However, the past year has seen a willingness to sign longer contracts. European customers are now looking for medium-term deals, extending up to 15 years, and Chevron is actively engaged in these business transactions.
In the previous month, both Shell and TotalEnergies separately announced agreements to supply LNG to Europe for 27 years, partnering with Qatar, one of the world’s leading gas producers.
Chevron primarily sources most of its LNG from the United States, which has become a major LNG supplier following the shale oil and gas revolution in recent years. In October, US LNG exports reached their second-highest level ever, with Europe remaining a key buyer.
In the short term, Parfitt noted that the European gas market appears adequately supplied ahead of the winter season. However, he emphasized that although European gas supplies seem stable, the market remains susceptible to fluctuations in case of a cold winter in Europe, a cold winter in Asia, supply risks, and geopolitical factors. These factors underscore the importance of considering various geopolitical influences and their potential impact on gas markets.
