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    France Blocks US LNG Deal Over Shale Concerns: Press


The deal is reportedly worth potentially $7bn.

by: Joe Murphy

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France Blocks US LNG Deal Over Shale Concerns: Press

The French government blocked Engie last month from signing a 20-year deal worth potentially $7bn with US LNG exporter NextDecade over concerns that US shale gas is too dirty, Politico reported on October 21, citing sources. Fracking to produce gas is banned in France, so extending the ban to imports that come from fracking would be consistent with French law.

It said the decision followed a meeting between a French affiliate of the green group Friends of the Earth and government officials. "“It could still be signed in the coming weeks,” the lobby group said. “But what is sure is the political, reputational risk around the validation of the contracts is one of the elements there. The climate impacts played a role.”

The gas in question will come from NextDecade's planned Rio Grande terminal in Texas. NextDecade had hoped to reach a final investment decision on the phased, 27mn metric ton/year project this year, but has delayed the move until 2021. According to Politico, it wants to have contracts in place for at least 11mn mt/yr of sales before taking the step.

NextDecade recently announced it would seek to bring down expected CO2 emissions at Rio Grande by 90% using carbon, capture and storage technology and other processes, and explore options to deal with the remaining 10%. 

The French government is a 24% shareholder in Engie with seats on the board, and was reportedly behind the ousting of the CEO Isabelle Kocher for selling off the company's coal and other assets too cheaply. The move to prevent the company from committing to buy LNG supplies comes after France's finance ministry proposed this month to phase out state export guarantees for gas projects by 2035. Guarantees will be ended for oil as early as 2025, but will continue for gas for longer as the fuel can be used to reduce emissions by replacing coal, the ministry said.