France asks Engie to delay U.S. LNG deal over environment concerns

The contract would be with NextDecade

  

PARIS- The French government asked power group Engie to hold off on signing a multi-billion dollar U.S. liquefied natural gas import contract on concerns over the deal's environmental implications, a source familiar with the matter said.

The intervention comes amid growing scrutiny over leaks of methane at oil and gas infrastructure, including at U.S. producers, and their impact on climate change. It has also emerged against the backdrop of broader trade disputes between Europe and the United States.

Engie's contract, worth $7 billion, would be with NextDecade, which is due to decide on whether to go ahead with plans to build its proposed Rio Grande export plant in Texas.

The project was "not aligned with France's environmental project and environmental vision", the source said, adding that the request had come from the economy ministry.

A spokeswoman for Engie, which is part-owned by the French state, said the company's board had decided to give itself more time to study the NextDecade contract, saying "the project required a more detailed examination".

But she declined to comment on whether this followed a request from the state, while the French government had no immediate comment.

Politico and French newsletter La Lettre A earlier reported that the state had intervened on the deal.

Reducing leaks of methane, a greenhouse gas with more than 80 times the climate warming potential of carbon dioxide in its first 20 years in the atmosphere, has increasingly become a focus of regulators, producers and investors.

The move also comes amid an escalating battle between the United States and Russia for Europe's gas markets, as well as trade disputes sparked by disagreements between Paris and Washington over taxes on big digital companies.

The European Union is the world's biggest gas import market and the United States is vying for market share with cheaper pipeline gas from Russia.

Engie, alongside other European energy firms, is one of the financial backers of the Nord Stream oil pipeline project which is led by Russian oil giant Gazprom GAZP.MM . The United States has imposed sanctions on Nord Stream accusing Moscow of using its energy resources "for coercive purposes".

The Kremlin accuses Washington of using the sanctions for unfair competition to promote pricier U.S. LNG.

(Reporting by Sarah White, Additional reporting by Elizabeth Pineau in Paris and Shadia Nasralla in London; editing by Richard Lough and Susan Fenton) ((sarah.white1@thomsonreuters.com; + 33 (0) 1 49 49 56 85;))

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