The Gas Exporting Countries Forum (GECF), the global platform of the leading gas producing nations, is exploring the possibility of creating an Electronic Trading Platform for the trade of carbon-neutral LNG.
Delivering a keynote at the Budapest LNG Summit 2021, Forum’s Secretary General HE Yury Sentyurin remarked that the 18-nation alliance sees promise in this new carbon reduction measure.
He also reiterated GECF’s commitment to support the decarbonisation of the energy sector during his address which was invited to focus on an overview of the global gas market for the largely Central-East European audience.
“The carbon neutrality in LNG is gaining momentum through technology-based strategies to curb GHG emissions and the trade of these cargoes is expected to grow significantly in the short- to medium-term. Despite the small number of carbon neutral LNG cargoes traded so far, representing less than 1% of global LNG trade, this new concept is impacting LNG contracts, where a new clause is being introduced, requesting the sellers to report the emissions from each LNG cargo, with no obligation to offset the emissions for the time being,” said HE Sentyurin.
“If we look at the GHG emissions along the LNG value chain, 75% are attributed to the final consumption, which is within the control of the final consumer and not the LNG producer.”
Furthermore, HE Sentyurin underscored that the GECF’s market share in Europe remains dominant and that the Forum also contributes its views through active participation in United Nations Economic Commission for Europe (UNECE).
According to him, in 2021, the market witnessed significant price spikes exceeding US$40 mmBtu driven by strong demand, tight supply due to maintenance at several gas and LNG facilities and high EU carbon prices, as well as low storage level in Europe.
The streak of bullish spot prices is expected to continue for the rest of 2021 until Q1-2022, he noted.
“Furthermore, oil indexed prices have shown much less volatility and proved to be not only competitive, but to have a lower market value when compared to hub-indexation. In that same vein, the GECF Member Countries proved their resilience during the Covid-19 pandemic by fulfilling all their contractual obligations, even going the extra mile by rerouting from their domestic supply,” added HE Sentyurin.
Carbon Neutral LNG (CNL) cargoes are a relatively new concept in the gas industry but have evoked global interest in a short period of time. These refer to cargoes in which the greenhouse gas (GHG) emissions have been offset through the purchase of carbon credits from nature-based or renewable projects, and is used as a carbon mitigation strategy in the LNG industry.
Citing the recently-released GECF Annual Short-Term Gas Market Report (ASTGMR) 2021, the official highlighted that around 27 CNL cargoes have been traded since July 2019, mainly in Northeast Asia and the remaining in Europe, Latin America, the Caribbean and the Middle East.