Opinions

U.S. Pause on LNG Exports or Opportunities for Other LNG Exporters

 

Photo: Jon Shapley / Houston Chronicle via Getty Images file

U.S. President Joe Biden paused approvals for pending and future applications to export liquefied natural gas (LNG) from new projects.

Earlier, climate activists appealed to the U.S. government in order to tighten permitting requirements for new liquefied natural gas export facilities. Climate activists argue that the active construction of LNG terminals in the U.S. will lead to a significant increase in the length of time the gas will be used, as well as increased global warming.

The following White House decision on a temporary pause on pending decisions for exports of liquefied natural gas is not surprising. In presidential election years, the White House is sensitive to this kind of demands from the electorate...

We will take a hard look at the impacts of LNG exports on energy costs, America’s energy security and our environment, President Joe Biden said in a statement. This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.

The Biden administration has said it is suspending permits for projects that were not scheduled to start up until three to four years from now. However, this move can open up new opportunities for countries competing with the U.S. in the LNG export market.

Currently, the largest players in the LNG market are Qatar, Australia, the U.S. and Russia. However, the potential of Qatar's resource base is "already realised to its fullest extent", with European companies signing contracts to supply gas from the country with an expiration date beyond 2050, according to the chairman and co-owner of Novatek. Thus, the U.S. decision has increased Russia's chances of achieving its goal of increasing the country's share in the LNG market to 30% by 2035.

To reach this goal, about 20 large- and medium-capacity LNG plants should be launched by 2035. Currently, there are two large-capacity projects in operation: Novatek's Yamal LNG plant (designed capacity of 16.5 million tonnes per year) and Gazprom’s Sakhalin-2 (9.6 million tonnes). Another major project underway in Russia is Novatek's Arctic LNG 2 plant. The project includes the construction of three LNG lines with a total capacity of 19.8 million tonnes per year by 2026. Gas producer Novatek can start shipping the first batch of LNG from the Arctic LNG 2 project in February 2024.

The US decision to suspend new LNG projects, though indirectly, may affect Russia's achievement of its goal: when the share of their exports shrinks, there is a possibility that Russia will reach the declared market share earlier since this will require smaller volumes, head of the analytical department of AMarkets said.

Thus, the White House decision will not have a noticeable impact on the LNG market in the coming years, but in the long term, the decision may open up new opportunities for countries competing with the U.S. in the LNG export market.

Sources:

Monocle

Vedomosty

The editorial board of The Arctic Century

 
31.01.2024
 

 

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