Page 5 - GLNG Week 38 2021

GLNG COMMENTARY GLNG

Cheniere Energy is
a leading US LNG
exporter.

“Excessive LNG export volumes are infla- The outlook ahead
tionary and threaten the competitiveness of The winter strip gas price at the US’ main Henry
trillions of dollars of manufacturing capital Hub is currently at $5.50 per mmBtu, or about
assets, millions of jobs and economic growth double what it was a year ago. This, IECA said,
by driving up the cost of natural gas, natural was costing US consumers some $109bn on an
gas liquids feedstock and electricity,” IECA annualised basis.
said. “This also presents a threat to reliabil- What is more, US gas stocks are at 7% below
ity, national security, and is a cost and human the five-year average for this time of year, which
safety issue.” IECA attributes to a surge in exports. The US has
The US needs to “shift from an LNG export exported around 10% of its natural gas this year,
driven policy to one that is US consumer-econ- which represents a 41% increase from a year ear-
omy balanced and establishes common sense lier, and there has not been a sufficient increase
and transparent public interest safeguards as in production to offset this demand.
intended under the Natural Gas Act,” it contin- Prices will need to reach $10 per mmBtu to
ued. “We support a reasoned volume of exports encourage producers to supply enough gas to
as long as it does not negatively impact US con- satisfy demand, the association said.
sumers and the economy as intended under the “At those price levels, as we experienced
NGA.” in 2008, manufacturing demand destruction
The association also said it was necessary to occurs,” it said. “Many manufacturers can no
reconsider the Department of Energy (DoE)’s longer compete in the market at those prices.
decision last year to indiscriminately extend all In 2008, we saw thousands of manufacturing
approved export agreements by 30 years through facilities shut down because they were no longer
2050, “which purposefully shifts incalculable profitable.”
risks from LNG exporters onto US consumers.” While current high gas prices in Asia and
The Trump administration viewed an expansion Europe are likely unsustainable, the global mar-
in LNG exports as a cornerstone of its energy ket is expected to remain unseasonably tight
strategy. during the rest of the autumn and the coming
Furthermore, the US continues to export the winter, especially in the event of cold weather.
bulk of its LNG supplies to countries without a There will therefore remain a strong incentive for
non-free trade agreement (NFTA) with Wash- LNG producers to export as much as they can.
ington. These same countries often impose trade The DoE is yet to respond to IECA’s request.
restrictions on US manufacturers, IECA said. Any significant changes to the NGA or other leg-
“From February 2016 to June 2021, 69% of islation are unlikely, although temporary meas-
all shipments were to NFTA countries,” the ures could be introduced to curb exports in the
trade group said. “When Congress passed the short term, depending on how tight the market
NGA, they specifically distinguished shipments gets. Some of the many liquefaction projects that
between FTA versus NFTA countries, implying a have been proposed could also falter because of
preference for shipments to free-trade countries. environmental opposition – whether in the US
The DoE has ignored this preference.” or the countries where their gas is destined. ™

Week 38 24•September•2021 www. NEWSBASE .com P5