Demand for LNG is rising as Europe turns to the fuel to help plug gaps after losing the supply of Russian gas piped through Ukraine. Exxon has four LNG projects under development and expects to start commissioning the production units in the US and Qatar first, by the end of this year. Other US export projects will also start ramping up production but the bulk of new supply won’t arrive until 2027.
“The problem is you don’t find gas from one day to the next,” ExxonMobil Europe president Philippe Ducom, told Bloomberg at the site of the Handelsblatt energy conference in Berlin, “Significant new LNG capacity is only coming on stream in 2026-2027.”
US President Donald Trump, whose country is the world’s biggest LNG exporter, has threatened Europeans with tariffs if they don’t buy more oil and gas. As soon as he took office this month, Trump also lifted a freeze on new LNG export permits that his predecessor Joe Biden had introduced, but these projects are not expected to go online before 2031.
Ducom said that Europe had been reluctant to commit to long-term contracts and bring supply security in the equation, which investors need to take the huge financial decisions to start new LNG projects.
“That’s clearly having an impact on the cost of energy for Europe because gas impacts power,” he said. “We will need gas for decades to come and in 2050, we will still need gas. But there has been this reluctance to commit and to try to bring supply security in the equation.”
Ducom also said that the European chemical sector, a key industrial user of gas as a feedstock, was in a crisis because demand on the continent isn’t growing and due to high energy and operating costs compared to other regions. “There is a lot of new capacity coming. Supply capacity is higher than demand. Chemical margins are really thin. Europe is probably the least competitive region in terms of chemical production right now.”
Many European industrial companies have had to slash output, close factories or relocate their production facilities outside Europe since the energy crisis of 2022 pushed up regional energy prices.
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