News Details
US decision to review LNG projects sends mix signals
The Biden administration's decision announced on Friday to halt new LNG export projects until fresh review by the US Department of Energy, is expected send mix signals to those considering fuel switch -from coal to LNG in the future. The review decision might also help second biggest LNG supplier Qatar to tap unexplored markets once the first phase of its Northfield expansion starts LNG export in 2026.
Apparently six LNG exporting projects, seeking nod from the US Department of Energy, will be subjected to detailed climate impact scrutiny among others. The list of six project includes Venture Global’s Calcasieu Pass 2 plant with proposed 20mil mt/year capacity expansion. While the DOE would be reviewing around 54mil mt/year new LNG export capacity in the US, Qatar Energy’s 33mil mt/year proposed expansion will go for commercial launch in 2026 in the first phase as announced.
Qatar has already laid down the foundation stone of its first phase of North Field project in October 2023 and scheduled the commissioning of first phase in two years. The first phase expansion will bring in additional 33 mil mt/year of LNG liquefaction capacity in to the market, raising Qatar’s LNG export capacity from current 77mil mt/year to 110mil mt/year by 2026 and further to 126mil mt/year by 2027 in second phase of expansion.
The United States, according to the US Department of Energy (DOE) November 2023 data, has 86.82mil mt/year of existing baseload liquefaction capacity and additional 47.40mil mt/year is under construction and expected to start commercial operations in phases by 2027. By 2027 US LNG export capacity will reach 134.22mil mt/year.
Among LNG importers, European Union imported 45.6mil mt (62.9 Bcm) of US LNG in 2023, up from 40.4 million mt in 2022 and just 15.8 million mt in 2021, according to data from S&P Global Commodity Insights. Although Europe has been consistently making efforts to reduce its dependence on imported LNG, it will require to contract additional more than 50mil mt/year LNG by 2030 to replace Russian gas, it used to receive through pipelines just before Ukraine invasion in Feb 2022.
The Biden administration’s move is largely seen as politically motivated, aiming at November Presidential elections in the US, wooing the young voters concerned about the climate changes. No wonder the administration has kept an option open to avoid the pause in the name of “national security emergencies.”
According to EU spokesperson review decision unlikely to have significant impact in the short to medium term and review has a provision for an exemption in case of national security and emergency need to help the US allies.
As a major consequence of LNG project review, it is widely apprehended that end-users in Asia and elsewhere might continue using coal and avoid switching fuel because of uncertainty over new liquefaction projects.
editor@lngworldwide.com
