WEBVTT 1 00:00:04.679 --> 00:00:08.240 With Laurent's segle End from London and Gerard Reed from Berlin. 2 00:00:08.759 --> 00:00:11.439 This is redefining energy today. 3 00:00:11.599 --> 00:00:14.599 On really think in LG we're going to talk about 4 00:00:15.119 --> 00:00:19.039 LNG liquefied natural gas and wonder if we are, as 5 00:00:19.079 --> 00:00:21.960 the oil and Gas company say, into the golden age 6 00:00:22.000 --> 00:00:24.079 of gas. 7 00:00:23.280 --> 00:00:26.480 Or something else, and that's something else around could be 8 00:00:26.800 --> 00:00:29.640 that we actually have a boom in the next few 9 00:00:29.719 --> 00:00:32.159 years and then a complete bust as we've got a 10 00:00:32.200 --> 00:00:35.439 glot of everything across the whole gas industry, from LNG 11 00:00:35.880 --> 00:00:39.439 capacity to energy ships to gas itself. 12 00:00:39.759 --> 00:00:41.920 But first as well from our partner, A. 13 00:00:41.960 --> 00:00:45.200 B Loco Energy is Europe's premier leaser of ten foot 14 00:00:45.280 --> 00:00:50.240 container mobile batteries built in Europe with COTL best LFP cells. 15 00:00:50.840 --> 00:00:56.119 A Bloco Energy serves fourteen European countries, including France, Germany 16 00:00:56.200 --> 00:00:59.399 and the UK. A Bloco's batteries can be leased for 17 00:00:59.439 --> 00:01:02.640 any jurrey between six weeks and six years, and they 18 00:01:02.679 --> 00:01:06.480 are managed by the Dutch award Welming Platform School A 19 00:01:06.599 --> 00:01:09.920 block O Energy Make your life easier, make your business 20 00:01:09.920 --> 00:01:10.599 more flexible. 21 00:01:10.840 --> 00:01:13.159 Back to the show, Yes child, So if I look 22 00:01:13.200 --> 00:01:18.840 at the statistic provided by the IA our friend Greg Molnar. 23 00:01:19.280 --> 00:01:21.959 He said that this year, in two twenty five, the 24 00:01:22.519 --> 00:01:28.599 FIDS for new liquefaction capacity will reach fifty five million 25 00:01:28.719 --> 00:01:31.560 tons peranum. I have no idea what that means, but 26 00:01:31.680 --> 00:01:33.640 what I do know is that it's the second best 27 00:01:33.719 --> 00:01:38.560 year for FIDS, second only to two nineteen. That means 28 00:01:38.599 --> 00:01:43.359 that the industry is going gangbuster. And the last example 29 00:01:43.519 --> 00:01:47.879 we had was last month fourteen billion dollars USD FID 30 00:01:48.120 --> 00:01:56.319 for Sempra Portart number two, mostly financed by Blackstone, KKR, Apollo, 31 00:01:56.319 --> 00:02:00.439 Goldman Sachs. So even Wall Streets is extremely bullish on LNG. 32 00:02:01.239 --> 00:02:03.840 Yeah, but I think we both agree around that there's 33 00:02:03.879 --> 00:02:06.439 probably a lot of risks out there, and we think 34 00:02:06.439 --> 00:02:09.360 it's time to actually have a really open conversation in 35 00:02:09.360 --> 00:02:12.800 and around the global gas market in the next few years, 36 00:02:12.879 --> 00:02:15.680 which is why we decided to bring a great guy 37 00:02:15.759 --> 00:02:18.439 in justin Mecalca. Do you want to talk a little 38 00:02:18.439 --> 00:02:19.080 bit about him. 39 00:02:19.159 --> 00:02:21.319 Yeah, So, first of all, it's not a NOI lobbyist, 40 00:02:21.439 --> 00:02:25.000 so we're going to have a really good conversation. Is 41 00:02:25.199 --> 00:02:28.680 for me, one of the best experts of that old universe. 42 00:02:29.159 --> 00:02:32.800 He has been investigating and reporting on the energy sector 43 00:02:32.879 --> 00:02:37.639 for decades, publish a regular insight called powering the Planet, 44 00:02:38.360 --> 00:02:41.479 and he is currently served as communication director at oil 45 00:02:41.520 --> 00:02:44.560 Field Witness, which is a US based nonprofit that is 46 00:02:44.639 --> 00:02:46.800 tracking gas with an emission. 47 00:02:47.240 --> 00:02:49.719 Let's play them on the show. Justin's great to have 48 00:02:49.759 --> 00:02:50.280 you on the show. 49 00:02:50.479 --> 00:02:51.639 Thank you. It's great to be here. 50 00:02:52.080 --> 00:02:54.439 So Justin, we are between two, say our week and 51 00:02:54.520 --> 00:02:56.400 have something to say about our week? Before I ask 52 00:02:56.439 --> 00:02:58.960 you the first question, I like to sing something. Because 53 00:02:58.960 --> 00:03:01.759 they asked me to come next year. I was thinking 54 00:03:02.000 --> 00:03:05.080 and a song came to my head, and that song 55 00:03:05.240 --> 00:03:07.879 is they wanted me to come to sera week and 56 00:03:07.960 --> 00:03:11.919 I say no, no, no gravel in front of oil 57 00:03:12.000 --> 00:03:18.240 lobbies and I say no, no, no. First question. The 58 00:03:18.439 --> 00:03:21.520 narrative of the fossil free industry is the following year 59 00:03:21.719 --> 00:03:24.639 we're going to have a continued use of fossil fuel, 60 00:03:25.080 --> 00:03:29.800 particularly LNG. Is the golden age of gas doubling the 61 00:03:29.800 --> 00:03:32.479 next ten years while aill continue to growth and of 62 00:03:32.479 --> 00:03:35.360 course a price is supported by geopolitics. And if I 63 00:03:35.360 --> 00:03:38.159 look at the investment in the US in allergy terminal, 64 00:03:38.240 --> 00:03:42.000 it's absolutely phenomenon I in doubling the production. So Justin 65 00:03:42.159 --> 00:03:46.159 you're here to help us dismantle that narrative. Why do 66 00:03:46.199 --> 00:03:46.919 you think it's wrong? 67 00:03:47.360 --> 00:03:49.280 First, I want to say it makes a lot of 68 00:03:49.280 --> 00:03:52.319 sense for the industry to be pushing this narrative, especially 69 00:03:52.319 --> 00:03:55.759 as we're seeing oil demand in China plateauing. If you 70 00:03:55.759 --> 00:03:58.080 want to talk about growth in the fossil fuel industry, 71 00:03:58.240 --> 00:04:01.199 it's gas, and so they have to make everyone believe 72 00:04:01.240 --> 00:04:04.159 that this is where the growth is. But what we 73 00:04:04.240 --> 00:04:08.319 are seeing, and actually more rapidly than I expected, China 74 00:04:08.360 --> 00:04:11.879 has stopped buying LNG and their demand has been going 75 00:04:11.919 --> 00:04:14.960 down year over year. We're also seeing that in India. 76 00:04:14.960 --> 00:04:16.920 We're seeing that in a lot of different countries. So 77 00:04:17.439 --> 00:04:19.600 right as we're being told by the industry we are 78 00:04:19.600 --> 00:04:22.439 about to enter the golden age of LERG and gas, 79 00:04:22.720 --> 00:04:24.920 we're seeing a lot of countries around the world who 80 00:04:24.920 --> 00:04:28.160 are the buyers of this product choosing alternatives. And what 81 00:04:28.199 --> 00:04:30.319 I've been arguing is this has very little to do 82 00:04:30.399 --> 00:04:33.519 with people wanting clean energy. It's all about the economics, 83 00:04:33.720 --> 00:04:37.079 and if you're looking at power generation, LERG is pretty 84 00:04:37.120 --> 00:04:40.360 much your most expensive option. So while it's fully understandable 85 00:04:40.399 --> 00:04:42.480 the industry wants us to think this, it's not what 86 00:04:42.560 --> 00:04:44.800 we're seeing happening playing out in the world right now. 87 00:04:45.079 --> 00:04:47.480 For me, the China market is gone. They signed the 88 00:04:47.519 --> 00:04:50.319 power of SIBAA number two. They're going to extend the 89 00:04:50.560 --> 00:04:54.759 Central Asian Pipeline from Turkmenistan, and I'm pretty sure they're 90 00:04:54.759 --> 00:04:58.639 going to get guess at what threefold on OMMBTU, So 91 00:04:58.680 --> 00:05:02.240 there's no way Energy can compete because geez always the digit. 92 00:05:02.839 --> 00:05:06.040 Yeah, China is very fascinating right now. The messages we've 93 00:05:06.040 --> 00:05:09.600 been hearing from the industry again, are they expect growth 94 00:05:09.639 --> 00:05:14.519 in China. Exxon recently said from maritime and trucking uses, 95 00:05:14.759 --> 00:05:17.319 and we already see that in China batteries are winning 96 00:05:17.319 --> 00:05:20.040 out in long haul trucking. If you're pinning the future 97 00:05:20.079 --> 00:05:23.759 of your LNG business on maritime use from the Chinese market, 98 00:05:23.959 --> 00:05:26.959 it starts to sound pretty desperate. And there was an 99 00:05:27.040 --> 00:05:31.639 article recently from Bloomberg basically saying that if you're expecting 100 00:05:31.920 --> 00:05:36.120 more demand from China for LNG, you're going to be disappointed, 101 00:05:36.360 --> 00:05:38.759 something I've been saying for a while, but it's very 102 00:05:38.759 --> 00:05:41.639 interesting to see that showing up in publications like Bloomberg. 103 00:05:41.680 --> 00:05:43.120 At this time, it's. 104 00:05:43.000 --> 00:05:45.160 Just an I go along with the view that, Look, 105 00:05:45.480 --> 00:05:49.120 what we've definitely are close to seeing is peak fossil 106 00:05:49.199 --> 00:05:52.959 fuel demand. And obviously we've seen this in the Western world, 107 00:05:53.199 --> 00:05:55.480 and I can imagine obviously a dead right. I think 108 00:05:55.600 --> 00:05:58.360 China we're very close to as well, and I can 109 00:05:58.399 --> 00:06:03.160 imagine that in the etcetera, etcetera, they'll follow China right 110 00:06:03.199 --> 00:06:04.680 and then electrify. 111 00:06:04.160 --> 00:06:06.319 As much as possible. I can see that. I'd like 112 00:06:06.399 --> 00:06:08.959 to hear your thoughts on the supply side, in otherwids. 113 00:06:08.959 --> 00:06:12.160 When you look at the supply of gas oil, how 114 00:06:12.160 --> 00:06:15.759 do you see this? And obviously this has huge implications 115 00:06:15.800 --> 00:06:20.079 because if you get this wrong as an investor, my god, 116 00:06:20.240 --> 00:06:21.680 you're going to lose a huge amount of money. 117 00:06:21.720 --> 00:06:24.040 So how do you view this well, I'm certainly on 118 00:06:24.120 --> 00:06:28.079 record saying that people investing in building more LNG export 119 00:06:28.160 --> 00:06:31.079 capacity for the US right now are going to lose money. 120 00:06:31.319 --> 00:06:33.759 And one of the main arguments I'm making is that 121 00:06:33.920 --> 00:06:36.439 is tied to the supply. A lot of the people 122 00:06:36.560 --> 00:06:39.480 making these investments appear to be working under the illusion 123 00:06:39.560 --> 00:06:42.480 that the US has an endless supply of cheap gas, 124 00:06:42.959 --> 00:06:45.439 and the markets have been very shaped by the fact 125 00:06:45.519 --> 00:06:48.000 that the Henry Hub, the price of gas in the 126 00:06:48.120 --> 00:06:51.240 US has been extremely low for the past decade, well 127 00:06:51.279 --> 00:06:54.639 below historical norms, and people have now seemed to have 128 00:06:54.639 --> 00:06:56.959 accepted that that's how it's going to be going forward, 129 00:06:57.240 --> 00:07:00.000 which might be the case if we continue to produce 130 00:07:00.199 --> 00:07:03.079 so much of this gas, but we're reaching the limit 131 00:07:03.160 --> 00:07:05.759 of that, and what we're going to run into if 132 00:07:05.800 --> 00:07:09.040 they are able to find markets to export the amounts 133 00:07:09.040 --> 00:07:11.480 of LERG they're talking about in the next five years, 134 00:07:11.959 --> 00:07:14.920 there will be gas shortages domestically in the US. So 135 00:07:15.000 --> 00:07:17.480 the prices of US domestic gas are going to go 136 00:07:17.560 --> 00:07:20.560 way up, which seems to be just a problem for 137 00:07:21.199 --> 00:07:25.279 US industry and US consumers residential consumers. But where that 138 00:07:25.319 --> 00:07:27.800 becomes a real problem if you're an investor in LNG 139 00:07:28.000 --> 00:07:31.199 exporting is the price of your lergy exports is also 140 00:07:31.319 --> 00:07:34.279 tied to the Henry Hub price. And so when we 141 00:07:34.360 --> 00:07:37.199 get a shortage of gas in the US in these 142 00:07:37.240 --> 00:07:40.759 coming years due to the huge increase in energy exports, 143 00:07:41.160 --> 00:07:44.839 it's going to raise the price of US LNG. And we, 144 00:07:45.199 --> 00:07:47.720 as US, our LERG prices are already some of the 145 00:07:47.759 --> 00:07:51.680 highest in the world. So from an investment standpoint right now, 146 00:07:51.759 --> 00:07:56.720 investing in increasing US LERG export capacity seems to be 147 00:07:57.079 --> 00:07:58.959 very risky for a lot of reasons, and one of 148 00:07:58.959 --> 00:08:01.120 them is tied to the limitations of supply. 149 00:08:01.759 --> 00:08:03.720 Can I follow on more specifically on that, and just 150 00:08:03.720 --> 00:08:06.600 as what you're sort of saying is that we're near 151 00:08:06.800 --> 00:08:08.959 peak production in the US in terms of gas. In 152 00:08:09.000 --> 00:08:11.000 other words, what you're sort of saying is that if 153 00:08:11.040 --> 00:08:13.480 I look at the Permium basis and you look at 154 00:08:13.519 --> 00:08:16.680 marshallis what you're saying is the supply of that is 155 00:08:16.720 --> 00:08:18.600 just going to fall down like that, right, And that 156 00:08:18.680 --> 00:08:21.199 means you need to go to new places and where 157 00:08:21.240 --> 00:08:23.560 you go to is going to be just more expensive. 158 00:08:23.720 --> 00:08:24.680 Is that the way you look at it? 159 00:08:25.120 --> 00:08:27.920 Yeah, I mean we're seeing peak production the Permian right now. 160 00:08:27.959 --> 00:08:30.639 And one of the reasons we've had so much cheap 161 00:08:30.759 --> 00:08:33.200 gas in the US for the last decade is a 162 00:08:33.200 --> 00:08:36.039 lot of it is associated gas, So it's gas that's 163 00:08:36.080 --> 00:08:38.600 coming out of the ground in Permian oil wells and 164 00:08:38.639 --> 00:08:42.240 in other oil wells. And as the economics of oil 165 00:08:42.559 --> 00:08:45.240 are going south very quickly in the US and we're 166 00:08:45.279 --> 00:08:49.240 expecting fifty dollars prices next year, US oil production is 167 00:08:49.279 --> 00:08:52.320 going to slow down. This is also partly due because 168 00:08:52.360 --> 00:08:55.279 they're running out of the Tier one assets in the shale. 169 00:08:55.480 --> 00:08:58.159 US oil production is going to go down anyways, but 170 00:08:58.320 --> 00:09:01.600 gas production will be dropping in the permium. The associated 171 00:09:01.639 --> 00:09:05.279 gas production Marcellis has limits. So what they're talking about 172 00:09:05.320 --> 00:09:08.360 is the Hainesville, and they're certainly gas in the Hainesville. 173 00:09:08.440 --> 00:09:11.879 They require much deeper wells. I've seen price estimates of 174 00:09:11.919 --> 00:09:14.919 thirty million dollars as well, which means you require much 175 00:09:15.039 --> 00:09:18.200 higher gas prices to make that work. The reality is 176 00:09:18.480 --> 00:09:21.240 there's plenty of oil and gas left in the ground 177 00:09:21.240 --> 00:09:24.000 and in the shale. It's just very expensive to get 178 00:09:24.080 --> 00:09:26.799 to And if you want to compete on the global 179 00:09:26.840 --> 00:09:30.519 markets with renewables, which is what's dominating power generation, and 180 00:09:30.559 --> 00:09:33.240 you want to do that with an ever increasing cost 181 00:09:33.320 --> 00:09:35.759 of your product, it's not a good long term strategy. 182 00:09:36.080 --> 00:09:39.120 When I look at the LNGNG xposector in the US, 183 00:09:39.399 --> 00:09:43.000 first you have to admit it's an extraordinary induscale success 184 00:09:43.080 --> 00:09:46.200 because they went from zero to right now, they're on 185 00:09:46.360 --> 00:09:50.120 track to build twelve terminals operational within the end of 186 00:09:50.200 --> 00:09:55.080 the decade. And right now LNG represents sixteen percent of 187 00:09:55.240 --> 00:09:59.600 US gas production and they want to go to thirty percent. Now, 188 00:09:59.720 --> 00:10:02.039 I I can understand some guys say, look, the price 189 00:10:02.080 --> 00:10:05.320 a herbal negative, so you know, we still have a 190 00:10:05.399 --> 00:10:09.039 lot of cheap gas. But it's crazy to think that 191 00:10:09.120 --> 00:10:12.279 they can expose thirty percent of the US gas consumption 192 00:10:12.840 --> 00:10:15.600 without any impact on prices all do you see this way? 193 00:10:16.120 --> 00:10:16.360 Yeah? 194 00:10:16.519 --> 00:10:18.159 It's not just me. I mean there are other people 195 00:10:18.159 --> 00:10:20.360 who have been saying this, like all of these things 196 00:10:20.399 --> 00:10:24.159 you're predicting can't possibly happen. It thirty percent of US 197 00:10:24.200 --> 00:10:26.840 gas is being exported, that's going to be taking away, 198 00:10:26.879 --> 00:10:29.559 and this is at a time which I don't believe 199 00:10:29.720 --> 00:10:31.639 all of this will happen due to a lot of 200 00:10:31.679 --> 00:10:35.600 different factors. About building out gas power generation for data 201 00:10:35.639 --> 00:10:38.600 centers in the US, that is a big story right now. 202 00:10:38.600 --> 00:10:40.159 They're saying we're going to put a lot of gas 203 00:10:40.200 --> 00:10:44.080 towards this. Where's that coming from? If you're exporting thirty percent, 204 00:10:44.399 --> 00:10:47.559 All of the scenarios they're pushing forth lead to much 205 00:10:47.679 --> 00:10:51.039 higher gas prices in the US, which means US LNG 206 00:10:51.200 --> 00:10:54.759 becomes more expensive. So something has to give. And the 207 00:10:54.879 --> 00:10:57.960 argument I've been making is LNG is already too expensive. 208 00:10:58.240 --> 00:11:00.440 In India, they're saying we'll buy your own if you 209 00:11:00.480 --> 00:11:03.519 cut the price in half. Then it becomes competitive. And 210 00:11:03.559 --> 00:11:05.840 what the dynamics of what's happening in the US right 211 00:11:05.879 --> 00:11:09.679 now is they're looking to drive gas prices higher, which 212 00:11:09.720 --> 00:11:12.799 makes US l G more expensive. At the same time, 213 00:11:12.879 --> 00:11:15.240 there's plenty of gas in other areas that are going 214 00:11:15.240 --> 00:11:18.559 to be producing at much lower cost at LNG that 215 00:11:18.639 --> 00:11:21.840 will be competing with the US. But from a US standpoint, 216 00:11:22.000 --> 00:11:26.159 the first piece to fall in the global LNG bubble 217 00:11:26.279 --> 00:11:28.480 or mirage is going to be the US for a 218 00:11:28.519 --> 00:11:29.559 lot of different reasons. 219 00:11:29.919 --> 00:11:32.200 Party way does one other thing as well, which is, 220 00:11:32.200 --> 00:11:34.919 at the end of the day, pipeline gas is the 221 00:11:34.960 --> 00:11:38.879 cheapest way to transport that, and you're seeing China obviously 222 00:11:39.080 --> 00:11:41.919 come into agreements with Russia in terms of building new pipelines. 223 00:11:42.440 --> 00:11:44.240 At some point in time, You're probably going to see 224 00:11:44.279 --> 00:11:46.879 Russian gas coming into Europe as well, so that obviously 225 00:11:46.919 --> 00:11:48.919 then puts even more pressure on LNG. 226 00:11:49.200 --> 00:11:53.360 Right Yeah, the pipeline from Russia to China. When that 227 00:11:53.399 --> 00:11:55.919 was announced, my comment was, I'm sure glad I just 228 00:11:55.960 --> 00:11:59.000 didn't loan fifteen billion dollars for a new LNG export 229 00:11:59.080 --> 00:12:02.080 terminal on the US CUS Host because those aren't going 230 00:12:02.120 --> 00:12:04.519 to be built for years, and they'll be coming online 231 00:12:04.519 --> 00:12:07.080 when if that pipeline comes to fruition as they plan, 232 00:12:07.279 --> 00:12:09.600 they'll be competing directly with that. And as you point out, 233 00:12:09.639 --> 00:12:11.000 the economics aren't even close. 234 00:12:11.519 --> 00:12:14.879 Now there's an element I've read and highlighted by one 235 00:12:14.879 --> 00:12:17.120 of the best experts of gas. I'm in there too, 236 00:12:17.200 --> 00:12:20.080 the scept Kennedy, and but the other ones that I right, Joseph, 237 00:12:20.240 --> 00:12:23.200 and he said that the people who contracted long term 238 00:12:23.360 --> 00:12:25.960 USL and G are traders, so in fact it's not 239 00:12:26.159 --> 00:12:29.720 even the final destination. So those people will have to 240 00:12:29.799 --> 00:12:32.879 resell the gas. They've taken the bet that the market 241 00:12:32.919 --> 00:12:36.200 will be short, and maybe it was, and maybe Europe 242 00:12:36.200 --> 00:12:39.120 will never touch Russian gas again. I go back to 243 00:12:39.200 --> 00:12:42.759 my discussion with the guy from Enron twenty five years ago. 244 00:12:43.120 --> 00:12:46.240 The balancing point is six dollar up a gichedule, so 245 00:12:46.279 --> 00:12:48.519 six doll up and METU. If you're below you're going 246 00:12:48.600 --> 00:12:50.639 to use gas, and if you're above, you're going to 247 00:12:50.759 --> 00:12:53.960 use whatever else you have, whether it's called ornable. And 248 00:12:54.120 --> 00:12:56.559 if I look at the price the TTF, so the 249 00:12:56.639 --> 00:13:00.159 important price in Rotterdam or at eleven dollars. This this 250 00:13:00.200 --> 00:13:03.320 is a very very expensive fuel. People don't talk about 251 00:13:03.399 --> 00:13:06.480 climate that people took about affordability. As you said, it's 252 00:13:06.519 --> 00:13:09.840 a very expensive fuel, and some guys magically think which 253 00:13:09.879 --> 00:13:12.480 is going to swallow it and say thank you, thank you, 254 00:13:12.519 --> 00:13:14.759 mister President. My opinions is not going to happen. 255 00:13:15.240 --> 00:13:15.559 Yeah. 256 00:13:15.639 --> 00:13:18.000 If you look at the volumes of LNG that are 257 00:13:18.000 --> 00:13:21.960 contracted that are from traders or for large oil companies 258 00:13:21.960 --> 00:13:25.559 who for their internal trading, you're setting up a situation 259 00:13:25.559 --> 00:13:27.200 where we're going to have a lot of people looking 260 00:13:27.320 --> 00:13:30.679 to trade LNG, but no one looking to purchase it. 261 00:13:30.759 --> 00:13:34.960 And there's an example that just recently happened where one 262 00:13:35.039 --> 00:13:38.600 of the largest gas producers in the US EQT just 263 00:13:38.919 --> 00:13:43.799 signed a contract to buy exported LNG from a US terminal. 264 00:13:43.960 --> 00:13:47.440 So we have a US gas producer agreeing to buy 265 00:13:47.919 --> 00:13:51.360 US gas. They're essentially signed a contract to buy their 266 00:13:51.360 --> 00:13:54.159 own product. That to me is such an indication of 267 00:13:54.279 --> 00:13:57.279 where the industry we're in a at the end stage 268 00:13:57.320 --> 00:14:00.879 of this hype or bubble or mirage of the LNG 269 00:14:01.279 --> 00:14:04.440 when US gas producing companies because they're going to have 270 00:14:04.480 --> 00:14:07.519 to trade that, I see a scenario ten years down 271 00:14:07.519 --> 00:14:08.720 the road where we're going to have a lot of 272 00:14:08.720 --> 00:14:11.360 people with a lot of LNG contracted who are looking 273 00:14:11.360 --> 00:14:13.960 to trade with each other, but there are no end users. 274 00:14:14.559 --> 00:14:16.639 So just to what you're sort of saying, is that 275 00:14:16.639 --> 00:14:18.960 what we're going to see is substantial levels of stranded 276 00:14:18.960 --> 00:14:19.960 assets in this space. 277 00:14:20.399 --> 00:14:22.960 I don't see any way that doesn't happen. There are 278 00:14:23.039 --> 00:14:25.840 so many factors that are lined up to make that 279 00:14:25.960 --> 00:14:30.200 scenario the most likely outcome, especially with the US, and 280 00:14:30.240 --> 00:14:32.440 you're seeing it in the media now. Some people are 281 00:14:32.480 --> 00:14:34.559 starting to say, well, it looks like we're going to 282 00:14:34.559 --> 00:14:37.039 have a glut. Everyone's pretty much agreed there's going to 283 00:14:37.080 --> 00:14:40.399 be a glut. Other than perhaps CEO of Exxon and 284 00:14:40.440 --> 00:14:42.720 the CEO of Venture Global, we are going to have 285 00:14:42.759 --> 00:14:44.519 a glut. There's going to be a lot more on 286 00:14:44.559 --> 00:14:48.000 the market. Everyone talking about that pretty much is agreeing 287 00:14:48.039 --> 00:14:51.600 that the first local economy to suffer the impacts of 288 00:14:51.639 --> 00:14:55.039 that will be the US due to the various economic 289 00:14:55.120 --> 00:14:57.919 factors involved. If there are going to be stranded assets, 290 00:14:57.960 --> 00:15:00.120 I expect they will be on the Gulf coast, the 291 00:15:00.200 --> 00:15:04.279 US or Canada. Canada isn't making smart moves here either, 292 00:15:04.720 --> 00:15:07.159 and now they're talking about trying to build export terminals 293 00:15:07.159 --> 00:15:10.600 in Mexico. The justification to that is to take permian 294 00:15:10.679 --> 00:15:13.879 gas from Texas, get it to the west coast of 295 00:15:14.000 --> 00:15:16.480 Mexico and sell it to China. Do you want to 296 00:15:16.480 --> 00:15:19.360 be trying to sell China LNG five years from now? 297 00:15:19.600 --> 00:15:22.519 Those assets, if they are built, they will be stranded assets. 298 00:15:22.840 --> 00:15:24.960 You name one of the company which is not very 299 00:15:25.120 --> 00:15:28.519 dear two European traders is Venture Global, which is the 300 00:15:28.600 --> 00:15:34.000 second biggest developer after Shinier. And what happened this summer 301 00:15:34.120 --> 00:15:37.519 where the arbitration gave right to Venture Global despite the 302 00:15:37.559 --> 00:15:40.799 fact that they've traded what three hundred cargoes of ellen 303 00:15:40.840 --> 00:15:44.120 GI's outside their contract the pretender there was still work 304 00:15:44.159 --> 00:15:46.879 in progust so they could sell at top spot prices 305 00:15:46.919 --> 00:15:49.519 and not at contract prices. And I think you know 306 00:15:49.679 --> 00:15:53.000 Shell has lost what four billion and VP about the 307 00:15:53.000 --> 00:15:57.399 same amount. Traders are very long memory, so I'm pretty 308 00:15:57.399 --> 00:16:00.759 sure they'll be the first one punished. Now. I want 309 00:16:00.799 --> 00:16:03.039 to move a bit on the environmental point of view, 310 00:16:03.159 --> 00:16:06.639 because the narrative, again and again and again has mean 311 00:16:07.399 --> 00:16:11.159 we're so clean, we're so clean, we're replacing coal and 312 00:16:11.480 --> 00:16:13.960 gas is so clean. But in fact, some of the 313 00:16:14.000 --> 00:16:17.480 work you've been doing and other great research has proven 314 00:16:17.600 --> 00:16:20.799 that there's a lot of CO two embedded in that LENG, 315 00:16:21.440 --> 00:16:24.480 which of course clashes with the European methane rules. So 316 00:16:24.559 --> 00:16:25.879 do you want to elaborate a bit on. 317 00:16:25.840 --> 00:16:28.240 That along with what we talked about at the beginning, 318 00:16:28.240 --> 00:16:31.200 where they're talking about the golden age of gas. The 319 00:16:31.360 --> 00:16:33.799 industry has done a great job of selling the world 320 00:16:33.879 --> 00:16:36.559 on the idea that LNG is a clean fuel, it 321 00:16:36.559 --> 00:16:38.759 should replace coal, and I mean they go so far 322 00:16:38.759 --> 00:16:42.519 it's called a climate solution. The science peer reviewed science 323 00:16:42.559 --> 00:16:45.600 shows that when you take that gas from a US 324 00:16:45.759 --> 00:16:49.240 field like the Permian and all that transportation and bringing 325 00:16:49.240 --> 00:16:52.799 it across the ocean, emissions from that are higher than coal. 326 00:16:53.200 --> 00:16:55.840 But the other aspect of that is in places like 327 00:16:55.960 --> 00:16:59.559 China and India, gas is not replacing coal because call 328 00:16:59.679 --> 00:17:03.360 is somewhere it's cheaper. And so the idea that LNG 329 00:17:03.600 --> 00:17:06.599 is somehow going to rid the world of coal, there 330 00:17:06.640 --> 00:17:09.200 isn't basis for that either. If you look at it 331 00:17:09.200 --> 00:17:13.039 from a climate standpoint, LNG of course is a hydrocarbon. 332 00:17:13.079 --> 00:17:16.279 We're combusting it, it's emitting CO two, But there's also 333 00:17:16.440 --> 00:17:20.720 the associated methane emissions, especially USLNG, we have very high 334 00:17:20.759 --> 00:17:24.759 methane emissions. So this is the scientist who led this 335 00:17:24.920 --> 00:17:28.000 study that showed that with the higher emissions has said 336 00:17:28.039 --> 00:17:30.000 he thinks this is the worst fossil fuel we could 337 00:17:30.000 --> 00:17:32.920 be choosing right now, and there's a strong argument to 338 00:17:32.960 --> 00:17:35.240 be made for that. That's a whole other aspect. I 339 00:17:35.279 --> 00:17:38.680 don't expect these major governments, and it looks like the 340 00:17:38.720 --> 00:17:43.039 EU is weakening their stance on their methane regulations, which 341 00:17:43.079 --> 00:17:45.960 weren't very strong to begin with. They're under extreme pressure 342 00:17:45.960 --> 00:17:48.559 from the US. But if you look at the science 343 00:17:48.599 --> 00:17:50.880 and the reality on the ground in the oil and 344 00:17:50.920 --> 00:17:54.119 gas fields of the US, there is no way US 345 00:17:54.279 --> 00:17:57.480 gas as LNG can meet the standards that the EU 346 00:17:57.599 --> 00:17:58.799 is saying they require. 347 00:17:59.400 --> 00:18:02.720 What we live in world where it's all about energy security, 348 00:18:03.000 --> 00:18:05.319 and that's why we take that GUS because present we 349 00:18:05.359 --> 00:18:06.400 don't have any choice. 350 00:18:06.960 --> 00:18:07.240 Right. 351 00:18:07.440 --> 00:18:10.079 That's certainly been the justification for this. But one of 352 00:18:10.119 --> 00:18:12.640 the interesting things I think what's happened in the EU 353 00:18:13.319 --> 00:18:17.400 is when the Russian invasion first happened, there was this 354 00:18:17.519 --> 00:18:20.119 huge push by the industry to say, this is why 355 00:18:20.160 --> 00:18:22.920 you need USL and G, you need energy security, more 356 00:18:22.960 --> 00:18:25.680 fossil fuels you can count on but Europe has certainly 357 00:18:25.720 --> 00:18:27.839 moved strongly to renewables. 358 00:18:28.039 --> 00:18:29.359 And if we think. 359 00:18:29.200 --> 00:18:32.079 About in the year twenty twenty five, a country that 360 00:18:32.119 --> 00:18:35.200 does not have their own fossil fuel reserves, if they 361 00:18:35.240 --> 00:18:39.119 want to think about energy security, it's renewables and it's storage, 362 00:18:39.240 --> 00:18:42.400 things that you can control and not rely on the 363 00:18:42.440 --> 00:18:46.359 incredibly volatile pricing of fossil fuels, but also the security 364 00:18:46.400 --> 00:18:50.119 of your ability to get those, and the political situation 365 00:18:50.240 --> 00:18:53.960 around the major exporters continues to destabilize. I think I 366 00:18:53.960 --> 00:18:57.000 would not want to be betting my future on current 367 00:18:57.079 --> 00:18:58.440 policy from the major exporter. 368 00:18:59.079 --> 00:19:01.519 There are days in Europe where people think that Katar 369 00:19:01.680 --> 00:19:04.960 is a more valuable supplier than the US, and they 370 00:19:04.960 --> 00:19:08.720 are also going into a major expansion themselves. As you said, 371 00:19:08.720 --> 00:19:12.319 that undamental aspect is being put under the rug because 372 00:19:12.359 --> 00:19:14.680 the market was short, but I can tell you the 373 00:19:14.720 --> 00:19:18.240 de market is long. Those undamental criteria is going to 374 00:19:18.279 --> 00:19:21.240 come back and bite whoever as the because when the 375 00:19:21.319 --> 00:19:23.519 price is low and you have the choice, you're going 376 00:19:23.559 --> 00:19:26.799 to choose the Katari gas because it's carbon footprint is 377 00:19:26.880 --> 00:19:29.400 much lower than in the US. That's going to be 378 00:19:29.440 --> 00:19:32.279 a double wamy for exporters. AM I the only guy 379 00:19:32.519 --> 00:19:33.680 thinking about that this way. 380 00:19:34.359 --> 00:19:36.880 I don't understand why someone with all the other options 381 00:19:36.920 --> 00:19:38.680 to good invest in fossil fuels right now. But if 382 00:19:38.720 --> 00:19:41.680 you are, you must be assuming that there will not 383 00:19:41.839 --> 00:19:45.400 be any sort of carbon pricing or people aren't really 384 00:19:45.440 --> 00:19:48.440 going to care about carbon emissions or metan emissions down 385 00:19:48.440 --> 00:19:50.839 the road. And I don't think that's a safe assumption 386 00:19:51.440 --> 00:19:53.920 for me. It all goes back to the economics. The 387 00:19:54.000 --> 00:19:56.960 reason I don't see lerg having a future is the economics. 388 00:19:57.440 --> 00:20:00.279 The Qataris can sell their lerg for a lot les's 389 00:20:00.319 --> 00:20:02.960 the US. They are in a situation like the Saudis 390 00:20:03.160 --> 00:20:05.359 being the last man's standing when it comes for the 391 00:20:05.359 --> 00:20:07.680 Saudis for oil and the Quitars like they've got a 392 00:20:07.680 --> 00:20:09.720 lot of it and it's cheap, and as you point out, 393 00:20:09.759 --> 00:20:11.680 it has lower emissions than the US production. 394 00:20:12.480 --> 00:20:15.599 Justin just maybe as the last question, you're in twenty thirty, 395 00:20:15.920 --> 00:20:18.240 you're looking back last five years, what's happened. 396 00:20:18.759 --> 00:20:20.519 One of the things I love about this work right 397 00:20:20.519 --> 00:20:23.599 now is it changes every day, and it's changing fast. 398 00:20:23.920 --> 00:20:26.599 I've been following the energy markets now, researching and writing 399 00:20:26.599 --> 00:20:29.599 around for over ten years. Where we are right now 400 00:20:29.759 --> 00:20:33.559 shocks me. The rapid rise of renewables, the drop and 401 00:20:33.680 --> 00:20:36.839