Navigating pricing and policy as energy industry grasps the gas route to a low-carbon scenario

Two energy leaders veterans brought their wisdom and experience to one of the industry’s hottest conundrums on the opening day of Gastech 2025. While the energy ecosystem has to deliver secure and reliable supplies amid volatile times, it has to balance that with the urgent need to decarbonise.

Opening day Executive Leadership Panel titled ‘Activating breakthrough technologies and strategic partnerships to realign business models for a new energy era’ heard that companies - and nations - are also tackling myriad other issues, such as fluctuating costs and anticipating uncertain future demand and pricing while AI and regulations impact business decisions.

All the while, the customer remains at the heart of strategies as companies balance affordability and supply, said Patrick Pouyanné, Chairman & CEO, TotalEnergies, the world’s third largest LNG play.

He previously described gas as the backbone of the transition and said the market was still aligned with that view “more than ever.

“When you look to the evolution of the last years, everybody realised that the transition will take some time, because it’s a matter of being able to deliver affordable energy to customers.

“Gas has a real contribution to that for many reasons, in particular, we see with demands for more AI, tech services, there is a growing demand for electricity.

“We need to produce this electricity. Of course, we invest in renewables, but it’s intermittent. Even if it’s green, it has to be reliable power, 24/7…and gas is a perfect complement to renewables.

“More and more I see gas is really part of the equation for the transition…this industry can manage emissions seriously.”

The discussion also touched on the emergence of long-term gas supply contracts in the shadow of geopolitical situations.

Pouyanné noted the differences between the US and Europe regarding energy resources and strategies, and pointed to a shift in Europe toward signing longer-term gas contracts for affordability and industrial stability, reflecting a more pragmatic approach to energy security.

While the US was a “land of energy” and a major exporter, regions such as Europe had to support all consumers against fluctuations.

This was particularly relevant to Japan, which Yukio Kani, Global CEO & Chair, JERA, said was at the opposite end of scale to the US.

“Japan has no natural resources,” he said. “So stability of energy supply is kicking in all the time. In the general case, we try to provide a solution by investing into the electric value chain, renewable and offshore wind.

“In the next couple of years, we will really focus on LNG to build a backbone to support affordable and stable supplies. We try not to predict the future, one thing we can do is prepare…and don’t put your eggs in the one basket. Try to prepare for uncertainty.”

This led to the issue of the ‘green premium’ consumers face around hydrogen, ammonia, offshore wind and the how that can impact price sensitive markets in Asia.

Pouyanné said he didn’t believe customers were not willing to pay more for sustainable energy. “The customer, whether an airline or a maritime company, they want cheap energy…if it’s sustainable, it’s on the top,” he said. “We focus on what is the most efficient for customers.”

What became clear is the flexibility and reliability of gas and LNG is crucial as industry players navigate complex challenges while pursuing both transition and energy security.

Pouyanné identified the risk of oversupply in the LNG market due to many new projects, which could lower prices and “create new market dynamics”. He also emphasised the need for resilience, investing in “the best projects”, and maintaining a strong market position.

Kani said he preferred to risk of over-commitment and use trading capabilities to manage volatility. “The worst case scenario is that we underestimate energy demand, we don’t secure LNG, and we have to go to the market to buy spot hardware,” he added. “And if the market is so tight, that is a devastating impact on our economy.”