The French government has asked utility company Engie to delay a $7-billion LNG import contract with US-based NextDecade amid concerns on the deal’s environmental impact, Reuters reported, citing a source familiar with the matter. The intervention comes after the French government said it would stop providing companies with state export guarantees on projects involving shale oil in 2021, all types of oil from 2025, and natural gas from 2035.
There is also growing scrutiny over the methane emissions and environmental impacts of hydraulic fracturing methods used to extract shale gas. The source said the request to halt the deal came from France’s economy ministry, arguing that the contract is not aligned with the country’s environmental commitments. Responding to the issue, a spokeswoman with the US Department of Energy said halting the LNG deal for political posturing is narrow-minded and short-sighted.
NextDecade refused to disclose its commercial dealings. The company said that it is working on measures to achieve carbon-neutrality at its Rio Grande LNG facility in Texas, which is currently waiting for a final go-ahead. NextDecade has deferred the final investment decision on the project to 2021 due to coronavirus-related lockdowns. Its contract with Engie is for a 20-year LNG supply.
Environmental activists both in France and the US welcomed the halt and hoped that the contract would never materialize. However, analysts said that the request from the economy ministry was motivated by broader trade tensions between the European Union and the US. Analysts said the contract would likely proceed if Joe Biden won the US presidential election in November. The Democratic presidential candidate is expected to implement tougher environmental rules and work on a trade deal with the EU, which may ease concerns of French regulators.
