Shell Says $450 Billion in U.S. LNG Exports Is ‘Optimistic’

Royal Dutch Shell Plc (RDSA) Chief Financial Officer Simon Henry said total pledges from the energy industry to invest $350 billion to $450 billion in projects for U.S. liquefied natural gas exports are “a little bit optimistic.”

Shell, the largest LNG supplier, has held exclusive talks to take a stake in the Freeport LNG project. The producer faces rival projects led by companies including Exxon Mobil Corp. (XOM), Cheniere Energy Inc. (LNG), Sempra Energy (SRE) and BG Group Plc. (BG/)

“If that’s all going to happen without inflation and with the support of the American people to export all that American gas to industrial competitors and it’s all going to happen by 2020, I think it’s a little bit optimistic,” Henry told reporters today on a conference call. “Today’s headlines usually become tomorrow’s challenged projects.”

U.S. gas prices fell to a decade-low this year on increased output from shale deposits. Companies have proposed to develop LNG export terminals to ship the fuel to Asia where prices are higher. The plans have run into opposition from politicians, who worry that it will lead to price increases for U.S. consumers, and environmental groups opposed to wider gas development.

Exporters have applied to the U.S. for approval for annual LNG shipments from the country of a combined 150 million tons, BG Chief Operating Officer Martin Houston said last month. So far only Cheniere’s Sabine Pass project received the approval to ship LNG to countries not covered by U.S. free trade agreements.

Four Ventures

“We have taken a view that there might be around 45 million tons somewhere around the decade and beyond,” Houston said. This volume represents four new LNG export projects at Lake Charles, Sabine Pass, Freeport and Cameron, he said.

BG Group agreed to buy 5.5 million of the annual 16 million tons of LNG from the Sabine Pass terminal, which also sold the fuel to companies including Korea Gas Corp., Gas Natural SDG SA and Gail India Ltd., Cheniere said.

Qatar’s venture with Exxon, Golden Pass Products LLC, in October said it was approved to export U.S. LNG. The same month, it applied for approval to export the fuel to non-FTA countries.

BG, the U.K.’s third-largest gas producer, expects the global LNG market to grow to 450 million tons by 2025, from 240 million tons a year now. The fuel’s share in total world gas use will expand to 14 percent from 10 percent in the period, BG Chief Executive Officer Frank Chapman said last month.

The U.S. has free trade agreements with 18 nations, which so far don’t include Japan, the largest LNG buyer. They also exclude China and India, which will be the second and third largest buyers of the fuel by 2025, according to BG forecasts.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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