The long-term liquefied natural gas (LNG) import contracts that ENGIE increasingly relies on contribute to the development of new LNG export terminals, in contradiction with credible decarbonization scenarios (1). At the risk of seeing stranded assets multiply or locking the company into a trajectory of climate chaos, ENGIE’s investors must oppose this strategy by voting against the re-election of Catherine MacGregor as director and against the “Say on Climate” (SoC) at the company’s General Assembly.
The long-term LNG import contracts (2) are the cornerstone of LNG expansion: they secure planned export terminal projects and guarantee markets for growing production, leading to the exploitation of new fields. European buyers, such as ENGIE, play a major role in this regard, having signed numerous LNG import contracts since 2022 related to planned projects, notably in the United States (3). The signing of such contracts, which lock in substantial LNG volumes for decades, undermines the goal of limiting global warming to 1.5°C— a concern that ENGIE seems to dismiss.
ENGIE’s long-term contracts support LNG and gas expansion
Between 2021 and 2023, ENGIE signed at least three new contracts (4) in addition to the three currently in place, which were signed between 2012 and 2018 (5). These new contracts extend beyond 2040 and involve importing shale gas from the United States. They are linked to new LNG export terminals and are necessary to secure financing for these projects (6). However, these terminals should not be built: the International Energy Agency (IEA) has repeatedly stated in its Net Zero Emissions by 2050 scenario that new LNG export terminals are incompatible with a 1.5°C pathway (7).
By signing these contracts, ENGIE also promotes the exploitation of new fossil gas fields and associated infrastructure, thereby locking-in a highly carbon-intensive trajectory. The boom in LNG demand, to which ENGIE contributes through its contracts signed in the United States, is one of the major reasons for the rapid growth of gas exploitation in the Permian Basin (8). This growth is accompanied by the construction of new pipelines (9).
The most recent contract signed by ENGIE involves purchasing fossil gas from Sempra for 15 years from Port Arthur LNG (10), a terminal under construction that is expected to begin operations in 2027. Kinder Morgan plans to develop the Trident Intrastate Pipeline to transport gas from the Permian Basin to the Port Arthur area, with commissioning scheduled for the same time as the first phase of the Port Arthur LNG terminal (11).
ENGIE’s contracts are incompatible with European decarbonization objectives
The signing of these contracts contradicts ENGIE’s commitment to the energy transition. They involve gas extracted by hydraulic fracturing (12), associated with particularly high methane emissions—U.S. LNG is more emission-intensive than coal (13).
Proof of the discomfort caused by this discrepancy, ENGIE, under pressure from the French state, initially had to backtrack on signing a contract with NextDecade for importing LNG from the Rio Grande LNG project in Texas (14). The French government was concerned about the environmental impacts of such a contract. And rightly so: the terminal would generate 191 million tonnes of CO2e annually (15), equivalent to 49 coal-fired power plants (16). The contract, which involved importing 1.75 million tonnes per year of LNG, was eventually signed in 2022 (17), with ENGIE justifying this choice by relying on NextDecade’s carbon capture and storage (CCS) project, which was supposed to reduce over 90% of the terminal’s CO2 emissions. The CCS project was eventually abandoned by NextDecade (18), while the contract remains in effect.
The mismatch between the planned LNG import volumes and European decarbonization objectives also raises concerns about the development of stranded assets. The increase in LNG import capacities on the European continent, combined with a decline in gas and LNG consumption (19), could already lead to LNG import capacities in Europe being three times higher than demand by 2030 (20).
In this context, ENGIE could choose to re-export the LNG volumes planned under its U.S. contracts (21) to Asia (22)— thus shifting the risk of locking in a carbon-heavy climate trajectory to another region of the world, forgetting that the fight against climate change is a global issue.
ENGIE’s strategy of signing long-term LNG import contracts is incompatible with a carbon-neutral trajectory. ENGIE must commit to not signing new long-term LNG import contracts without evidence that they are not linked to the construction of new export terminals or the opening of new gas fields. Reclaim Finance calls on ENGIE shareholders to vote against the SoC and the renewal of Catherine MacGregor’s mandate as director, also CEO of the company, at the utility’s General Assembly.
