• EC proposal on ‘sustainable’ natural gas whetting the appetites of Australian LNG producers

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      Patrick Lavery

      Combustion Industry News Editor

The Financial Times has reported on how Australian LNG producers are eyeing a production increase following the European Commission’s release of its energy taxonomy proposal.  This would classify natural gas as “sustainable” as a transition fuel to lower-carbon forms of power generation, if passed by European parliamentarians.

Australian producers are now calling for additional land to be opened up to exploration, and will use the EC’s proposal as evidence of a longer-term future for natural gas when seeking finance for new production projects. While Australia is currently the largest exporter of LNG in the world, it is not export to Europe that producers are planning for, but to sell to Asian countries to ‘help’ in their own transitions to lower-emissions economies, with the EC’s taxonomy inclusion offering a strategic marker of the industry’s perceived future.

LNG export prices for Australian producers roughly tripled between late 2020 and late 2021, giving an idea of the financial incentive in play for producers, and just how welcome the EC’s proposal is. It also shows the frailty of the International Energy Agency’s urging that, to meet 2050 net-zero targets, no new oil or gas exploration projects should occur from 2022 onwards.