NYReaders - The International Gas Union (IGU), an association of global gas-producing countries, said the White House's decision to pause on LNG exports sends an unsettling signal to the global energy market.
“The current dynamic we are seeing unfold is highly worrying. It is eroding these fundamental market principles and will harm global energy security and emission reduction” Menelaos (Mel) Ydreos, Secretary General of the International Gas Union said in a statement on Tuesday (30/01).
The US is the world’s largest LNG exporter and has revolutionized the global gas market, supercharging its liberalization by introducing great commercial flexibility in trade and contracts.
The functioning of a flexible global gas market made it possible to keep the world’s energy system above water during the worst energy crisis in memory.
“Having open, flexible, transparent, competitive, and reliable gas markets is imperative to ensuring the success of the global energy transition and safeguarding international energy security, while markets provide the best counterbalance to the politicization of energy supply,” IGU said.
On Jan. 26, 2024, the Biden-Harris Administration announced a temporary pause on pending decisions on exports of Liquefied Natural Gas (LNG) to non-FTA countries until the Department of Energy can update the underlying analyses for authorizations.
“The current economic and environmental analyses DOE uses to underpin its LNG export authorizations are roughly five years old and no longer adequately account for considerations like potential energy cost increases for American consumers and manufacturers beyond current authorizations or the latest assessment of the impact of greenhouse gas emissions,” the White House said.
White House said the decision will not impact the US ability to continue supplying LNG to its allies in the near term. Last year, roughly half of U.S. LNG exports went to Europe, and the U.S. has worked with the E.U. to successfully economize consumption and manage its storage to ensure that unprovoked acts of aggression cannot threaten its supply.
Furthermore, in 2022, the E.U and U.S. pledged to work toward the goal of ensuring additional LNG volumes for the E.U. market – with the U.S. exceeding our annual delivery targets to the E.U. in each of the past two years. Through existing LNG production and export infrastructure, the U.S. has – and will continue – to deliver for its allies.
IGU noted that globally, gas supply remains tight, and the market is vulnerable to more volatility and price escalation. Despite a cooling of prices in Europe and Asia, they remain nearly double the pre-crisis levels. But the world is not yet through the crisis.
Given this tight LNG supply, the IGU expressed its concerns over the US government's decision.
Meanwhile, the U.S. Chamber of Commerce, Business Europe and Keidanren (Japanese Business Federation) sent a letter to President Joe Biden, expressing their concerns over the decision and urging the President to reconsider the decision.
"As you know, non-FTA countries Japan and the European Union, both of which are heavily dependent on imports of U.S. LNG for energy security," the three groups wrote.
"We urge you to reconsider this decision in light of the unique and vital role of American natural gas in meeting the critical energy security and Paris Agreement objectives that our nations share," they said.