Total Says It Can Replace Russian Gas With Rising LNG Supply

(Bloomberg) -- TotalEnergies SE sees abundant alternatives to Russian gas as the European Union proposes a ban on all deliveries from the country by the end of 2027.

“The good news is that the LNG market will be well supplied from 2027, 2028 and 2029,” the company’s Chief Executive Officer Patrick Pouyanne said at a conference in Tokyo on Wednesday. 

The European Commission on Tuesday set out the legislation needed to end the bloc’s reliance on pipeline and liquefied natural gas supplies from Russia, starting by prohibiting new deals from next year. A ban on shipments under existing longer-term commitments would take effect by the end of 2027.

The EU has been an attractive destination for cargoes from Russia’s Yamal LNG export plant in the Arctic, with long-term contracts from companies including TotalEnergies. Meanwhile, LNG exports from the US — the world’s top supplier — are slated to double by the end of the decade, while Qatar pushes forward with a massive expansion plan.

Europeans have “lost trust in Russia as a supplier,” said Pouyanne. “Of course for Europe, finding alternatives is fundamental.”

Negotiations within the EU over the final shape of the deal to ban Russian gas are set to kick off with some countries unsure about the feasibility of the proposal. 

One concern among some member states, including Spain, is whether the law will have the legal heft to allow buyers to invoke force majeure and avoid massive fines from exiting existing contracts. There are also worries about the impact on prices.

(Updates with additional context in the last two paragraphs.)

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