Europe Drops Another Project to Buy U.S. LNG in Green Push
(Bloomberg) -- Developers of liquefied natural gas projects in the U.S. are facing more hurdles in their plans to ship the fuel to Europe.
The latest setback is the expiry of a 2017 accord between U.S. LNG developer NextDecade Corp. and the Port of Cork to build an import terminal in Ireland. The memorandum of understanding for the floating storage and regasification unit lapsed on Dec. 31 and the port has no plan to renew it, Eamon Ryan, Ireland’s climate minister, said in response to a question from a member of parliament.
“Due to the increased uncertainty in Ireland’s evolving policies regarding the importation of LNG, NextDecade has elected to suspend development activities related to the Inisfree FSRU project in the Port of Cork,” NextDecade said in an emailed statement.
While natural gas is the cleanest form of fossil fuel, it’s still a source of greenhouse-gas emissions and its production is blamed for polluting methane leaks. It’s the second setback for NextDecade in Europe. France’s Engie SA in November scrapped plans to buy LNG from the developer, handing a victory to an environmental group that had urged the French utility to drop the deal on pollution concerns.
The Houston-based developer intended to supply the terminal with LNG produced at its planned Rio Grande LNG facility in Texas. NextDecade continues to focus on that liquefaction facility, it said Thursday.
The Cork terminal is the second proposed LNG import project in Ireland that has been scrapped in the nation’s push for cleaner energy policies. Ireland’s coalition government, which now includes 12 members of the Green Party, in June withdrew the Shannon LNG import terminal from a short-list of projects eligible for European Union aid. New Fortress Energy was pursuing the Shannon facility.
Europe’s ambitions to make its economies carbon-neutral over the next three decades are a challenge to LNG producers that are seeking billions of dollars worth of investment to construct new terminals.
The Port of Cork project suspension won’t affect NextDecade’s ability to reach a final investment decision on its Rio Grande export project, Chief Executive Officer Matt Schatzman said in an emailed statement. The company is in talks with potential customers in Europe and elsewhere, and still expects to make a final investment decision this year, Schatzman said.
“We are targeting carbon neutrality at Rio Grande LNG with the use of carbon capture and storage and we believe that, in partnership with certain U.S. producers who will supply gas to Rio Grande LNG, we will be able to supply our customers LNG with some of the lowest greenhouse gas intensity,” he said.
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