CERAWEEK -- Exxon ahead of schedule on doubling LNG portfolio, exec says ...................
Thu, Mar 21, 2024
By Sabrina Valle and Curtis Williams
[ Note from Jon -- CERA is Cambridge Energy Research Associates, an energy research and consulting firm founded by Daniel Yergin and James Rosenfield. ]
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HOUSTON, March 21 (Reuters) -- Exxon Mobil is ahead of schedule with its plan to double the size of its liquefied natural gas (LNG) portfolio to 40 million tons per annum (mtpa) by 2030 and will focus on selling its own gas rather than trading that of third parties, the company's LNG chief said on Thursday.
Exxon is revamping its LNG trading strategy amid growing production of the fuel and as part of a wider corporate reorganization that began in 2022.
The oil major is relatively small in LNG trading compared to TotalEnergies and Shell PLC. Shell is one of the industry leaders and made $2.4 billion from trading LNG in the fourth quarter 2023.
Unlike Shell and Total, Exxon plans to mainly trade its own gas, said Peter Clarke, Exxon senior vice president for global LNG.
"Our portfolio is never going to look like Shell's, it's not going to look like Total's, we are targeting different aspects of the value chain," he told Reuters in an interview.
Exxon said in 2020 it planned to double its LNG portfolio to 40 mtpa by decade-year, from 20 mtpa. It is now producing just short of 30 mtpa, he said.
"We are well on track to achieve the objective we set ourselves back in 2020," Clarke said. "And we are slightly ahead of that."
While Exxon could widen its trading portfolio by purchasing and marketing LNG from third parties, Clarke said, it considers margins in that business are small compared to the profits it can make on its own natural gas.
For Exxon, there is more value in producing, liquefying and selling gas, he said. Long-term contracts still account for about 80% of the global LNG trade, he said.
"The big component in LNG is obviously the commercialization of the LNG itself," Clarke said. "We want to have the leading LNG portfolio in the world in terms of its financial robustness and financial returns. I would say we're well on the way to doing it."
Exxon's volumes will increase through the Golden Pass LNG project, where it has a 30% stake with QatarEnergies as a partner. That project has an estimated export capacity of around 18 mtpa and will produce its first LNG in 2025.
The company has said it expects to make a final investment decision for its PNG Papua LNG project in Papua New Guinea this year and begin engineering and design for a Mozambique project by year end.
Clarke said the projects would help Exxon supply clients in Asia, where the company sees the most potential growth.
"The market is expanding. And by 2050, 75% of global energy demand will be in Asia Pacific, so we are really focused in that area."
(Reporting by Curtis Williams and Sabrina Valle in Houston; Editing by Simon Webb and David Gregorio)
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