By Collin Eaton and Sarah McFarlane 

French power company Engie SA has halted negotiations on a multibillion-dollar contract to import U.S. liquefied natural gas, raising alarms in the American energy industry that environmental concerns could limit the foreign market for the fuel.

Engie didn't provide details about the proposed LNG deal with NextDecade Corp., which was reportedly a $7 billion, 20-year contract, or the reason it canceled talks with the Houston-based exporter.

Last month, Politico and French news outlet La Lettre A reported that the French government, which owns about 24% of Engie, had pushed Engie to delay or cancel the deal over concerns about the environmental and climate impact of fracking, and related emissions of methane, a potent greenhouse gas.

France's Ministry of the Economy and Finance didn't immediately respond to a request for comment.

NextDecade is courting potential customers for its proposed Rio Grande LNG export facility in Brownsville, Texas, which it has said could have the capacity to export 27 million metric tons of LNG a year. NextDecade, which is planning to make an investment decision on the project next year, didn't respond to requests for comment.

Mike Sommers, chief executive of the trade group American Petroleum Institute, called the move a misguided decision by the French government. He said the group believes global demand is still strong for American shale gas, which enables the nation's international allies to wean themselves off of energy supplies from countries that "may be hostile to democratic interests."

"In over 35 countries from Asia to Europe, American natural gas is already helping to reduce emissions and enabling increased energy security," Mr. Sommers said.

Engie's deal has long been opposed by some environmental groups. Lorette Philippot, private finance campaigner at the French branch of environmental group Friends of the Earth, applauded Engie and the French government's move as an explicit acknowledgment of the climate and environmental costs of extracting natural gas through fracking.

"This method of extraction creates disastrous effects on climate because of methane emissions," she said.

Many American oil and gas companies are voluntarily moving to reduce leaks of methane -- which is a more powerful greenhouse gas than carbon dioxide -- from oil and gas facilities amid concerns that the emissions could harm efforts to export the fuel around the world. But the oil and gas industry has been divided over whether to support stronger regulations.

Some bigger companies including Exxon Mobil Corp. and Royal Dutch Shell PLC have warned the Trump administration that failure to enact tougher regulations could weaken the argument that gas is a cleaner fuel. But some smaller independent companies have pushed back against regulations due to concerns about the costs. The Trump administration moved this summer to roll back Obama-era rules on methane emissions from oil and gas facilities.

Write to Collin Eaton at collin.eaton@wsj.com and Sarah McFarlane at sarah.mcfarlane@wsj.com

 

(END) Dow Jones Newswires

November 03, 2020 15:48 ET (20:48 GMT)

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