American producers are benefiting from the fall in European imports of Russian gas. Soaring prices are exploding their margins, TotalEnergies in the lead.
The United States are the big winners from the gas crisis in Europe. Since the beginning of the year, American gas has been surging on European shores as the Russians reduce the flow of gas pipelines to Germany or Italy.
US exports of liquefied natural gas (LNG) to Europe have doubled. In the first half of the year, they already reached 27 million tonnes, i.e. more than the 21 million tonnes for the whole of 2021, according to data from the international group of LNG importers (GIIGNL). In six months, Europe has already received more than the 230 LNG carriers which docked last year.
The volumes are exploding and the receipts too. American producers are also benefiting from the surge in LNG prices which have, on average, doubled.
“The average value of a shipment has increased from around $50 million to $80 million in 2022. At these price levels, US exports to Europe can be estimated at around $30 billion in the first half,” estimates the general delegate of the GIIGNL, Vincent Demoury.
This phenomenon has led to a global domino effect. The surge in prices at home has pushed American companies to sell more in Europe. Conversely, Asia preferred to reduce its purchases of American LNG. Demand fell by 20% in China and 15% in India. These two countries have suddenly revived their coal-fired power stations by buying cheap Russian lignite.
TotalEnergies rides the wave
Winner among the winners, the French TotalEnergies takes the prize of the first American LNG exporter, which its CEO Patrick Pouyanné claimed during its general meeting a month ago. The group took full advantage of the energy crisis. In the first quarter, the operating margin of its “gas” division tripled to 3 billion dollars over one year. And the second quarter promises to be just as profitable as prices remain high.
TotalEnergies is reaping the benefits of a long-standing strategy in LNG. First by investing in the Russian mega-project Yamal in 2014. Then by buying Engie’s LNG activities in 2018 for just $1.5 billion. Thanks to this acquisition, TotalEnergies notably recovered the American LNG project in Cameron, Louisiana, as well as a dozen LNG carriers.
A trend that will continue, first in the United States. The extension of this Cameron field will enable the group to increase its production by 30% by 2025. But the group is also betting on Qatar where it signed, a month ago, a -minority- investment in which will be the largest field in the world from 2027. The only downside: its project in Mozambique had to be suspended last year due to terrorist threats.
