Home Economic Gas tycoon Charif Souki urges industry to clean up under Biden

Gas tycoon Charif Souki urges industry to clean up under Biden

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US energy tycoon Charif Souki says his industry has to do more to clean up its act as investors increasingly shun fossil fuels and President Joe Biden promises to crack down on oil and gas pollution.

“People have decided to vilify hydrocarbons and some of it is deserved. We have to increase our standards” said Mr Souki, a dealmaker who pioneered exports from America’s shale patch over the past decade.

Mr Souki, whose company Tellurian hopes soon to start building a new $16.8bn export plant to ship natural gas overseas, called for a “complete ban” on methane leaks from gas operations and a nationwide price on carbon, like that in Europe.

“It is easy to do. We just have to do it,” Mr Souki told the Financial Times.

The Trump administration aggressively pushed exports of US oil and liquefied natural gas, a superchilled form of the fuel that can be delivered by ship, as part of its “Energy Dominance” foreign policy, dubbing the American exports “molecules of freedom”.

LNG is one of America’s fastest growing export products and successive administrations have sought to broker deals between US producers and Asian buyers to deepen trade ties and push US gas into Europe to counter Russian economic and security influence on the continent.

But perceptions of lax environmental standards in the US have threatened to undermine exports, especially after French utility Engie pulled out of a $7bn LNG deal with Houston-based NextDecade, over concerns of fracking’s climate impact.

Many in the booming US LNG export sector worry that the sector’s fast growth could now be imperilled by Mr Biden’s ambitious $2tn climate agenda. The new president nixed the Keystone XL pipeline, another major fossil fuel infrastructure project, on his first day in office last week.

Powerful Washington industry groups have adopted stronger environmental stances in recent weeks to shield against the backlash.

The American Petroleum Institute, which lobbies for the oil and gas sector, says it now supports federal methane regulations after years of opposing such mandates. The Chamber of Commerce has said in recent days it is now open to a carbon tax, a dramatic reversal for the group as Corporate America lines up behind climate action.

Joe Biden championed LNG export projects when he was vice-president under Barack Obama © Luke Sharrett/Bloomberg

US LNG exports hit records in December, just as a market rally pushed prices in Asia to all-time highs. The US now accounts for around 20 per cent of global LNG shipments.

Mr Souki helped launch the US’s LNG export industry while chief executive of Cheniere Energy, which has been exporting natural gas from the Gulf Coast since 2016.

He was ousted from the company in late 2015 in a boardroom coup led by activist investor Carl Icahn just months before the company’s first gas shipment.

Mr Biden championed those first LNG export projects when he was vice-president under Barack Obama and in the past has cast natural gas as a “transition fuel” as the world moves toward low-carbon energy.

But he has come into the presidency with a far more ambitious climate plan than the Obama administration and is under pressure from the progressive wing of his party and climate activists to crack down on fossil fuels.

Mr Souki expects US LNG exports to continue to grow given rising global demand for the fuel and expects the Biden administration will continue to see strategic value for Washington.

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The new administration has been staffed with “pragmatists”, he said, and former Obama-era officials that oversaw the emergence of the sector.

“We want to repair our relationships around the world and I think natural gas is going to be central to this discussion everywhere, whether it’s India or China or even Europe,” Mr Souki said.

Mr Souki has a lot riding on it. He says he is in talks with “around two dozen” potential investors for Houston-based Tellurian’s delayed Driftwood LNG project, a proposed giant export plant on the Gulf Coast in Louisiana.

He wants to sign on new investors in time to start construction this summer, which would make his among the first major fossil fuel projects of Mr Biden’s first term.

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