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Italy’s Eni looks to sell LNG in Southeast Asia, may introduce US LNG into portfolio
Italy’s Eni is looking to sell LNG into Southeast Asia to tap new emerging buyers and it may also consider introducing more US LNG into its portfolio to diversify its volumes, Cristian Signoretto, deputy chief operating officer natural resources and director global gas & LNG portfolio, told S&P Global Commodity Insights in an interview.
There is a lot of potential demand in Southeast Asia due to a number of reasons — floating regasification technology has made it much easier to get access to LNG compared to an onshore facility that would cost more and take very long to build; and the countries have to substitute coal with gas in order to reduce the use of polluting fuels, he said.
“So they are coming into the market. And this is a good niche opportunity for portfolio players and producers. We are actively marketing our volumes in those countries,” Signoretto said.
While Southeast Asian demand is much lower than South Korea, Japan or China, the region opens up multiple opportunities, he said. “So this is definitely a trend that is expected to increase.”
Signoretto said emerging buyers usually have national utilities that provide sovereign guarantees which helps facilitate transactions, although the smaller energy players can be more of a headache, when asked about the challenge of dealing with new buyers with low credit worthiness.
“With LNG you can take a bit more risk [compared to pipelines] in the sense that if for some reason the counterparty does not honor the contract, you still can move the LNG somewhere else,” he added.
Signoretto also said India is a very cautious buyer of gas as the right price is needed to displace other fuels in the country, and at around $15-$16/MMBtu, the country refrains from buying LNG because it’s too expensive. “They can use other fuels,” he said.
Meanwhile, China’s heating demand is a bit inflexible and inelastic because heating systems are switched to gas, its tough to go back to fuel oil or coal, he said. China is increasing the penetration of gas in industrial and power sectors, but they also have access to other sources like piped gas from Russia and Central Asia, although the country has a slightly higher price tolerance for LNG, Signoretto said.
Eni has plans to expand its contracted LNG portfolio to over 18 million mt/year by 2026, from around 10 million mt/year, which will help replace around 20 billion cubic meters of lost Russian gas by 2025. Most of this is expected to come from equity projects in Congo, Mozambique, Nigeria and Qatar.
In Mozambique, Eni recently developed the Coral Sul floating LNG project and the company is now working on a second floating LNG project in the country, Signoretto said.
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