Impact of new US LNG exports policy unclear

: Natural gas
18/12/19

The US Department of Energy (DOE) will no longer require companies to report the end-user country for US natural gas exports, an effort to promote growth of US exports.

The DOE will now only require that holders of export licenses report the initial destination of such exports — the same requirement it had before implementing the end-user requirement in February 2016. It also will remove from any export licenses it issued since February 2016 the requirement to report end-user countries.

The DOE said it is "impractical, if not impossible" for holders of export licenses to track molecules of US pipeline gas or LNG after such supplies arrive at an initial foreign destination.

The end-user requirement was primarily implemented to prevent proposed Canadian or Mexican LNG export facilities from gaining unfair advantages over LNG export terminals in the contiguous US. The DOE said in today's policy statement that "there is currently insufficient concern" that Canadian or Mexican LNG projects would attempt to game the new policy, or that any other LNG exporter would try to circumvent the spirit of US export policy.

"Right now, the US is growing its position as a global leader in LNG exports and is projected to be the third-largest in the world behind Australia and Qatar by the end of 2019," said DOE assistant secretary for fossil energy Steven Winberg. "Today's action is another way the Trump Administration is working to advance American energy dominance."

But the language of the order confused some US LNG developers as to whether Mexican and Canadian projects could be advantaged. The DOE said today it needed more time to answer Argus questions about the order.

Under the US Natural Gas Act the DOE is required to quickly and without modification approve pipeline gas or LNG exports to countries that have free trade agreements (FTAs) with the US, as such exports are presumed to be in the national interest. But the DOE can deny or modify exports to non-FTA countries if such exports are shown to be against the national interest.

Most LNG-consuming nations, including Japan, China and all European countries, do not have FTAs with the US, so US LNG exports to such countries would normally require non-FTA licenses. Primarily because of massive US shale gas reserves, the DOE has never denied or altered a non-FTA license based on concerns that such exports would increase domestic gas prices or otherwise harm the US. Some US LNG developers have said potential importing countries can be wary of signing long-term US LNG supply deals because of concerns that the DOE would rescind or modify non-FTA licenses if domestic gas prices spike unexpectedly. The DOE has said it would not alter non-FTA licenses to try to control domestic prices.

Since Canada and Mexico have FTAs with the US, the DOE under the Obama administration was concerned that US pipeline gas could be sent to those countries under irrevocable FTA licenses, and then that gas would be liquefied in Canada or Mexico for export to any country, including non-FTA nations. The DOE previously required the proposed Goldboro and Bear Head LNG export projects in eastern Canada to get non-FTA licenses to import US pipeline gas and then re-export it as LNG to non-FTA nations.

But with today's change it is unclear if new LNG projects in Canada or Mexico could just use an FTA license. Even if the DOE would require non-FTA licenses, it is not clear how it would enforce that provision if the end user country is not required to be reported.

San Diego-based Sempra Energy has proposed using US feed gas for its planned first-phase Energia Costa Azul LNG export project in northwest Mexico. The project is scheduled to come on line in 2023 with capacity of 2.4mn t/yr, equivalent to 309mn cf/d (3.3bn m³/yr) of gas. It has signed preliminary 20-year deals for all that output to France's Total and Japanese firms Tokyo Gas and Mitsui.

Sempra did not respond to an Argus inquiry as to whether it believes it would need a non-FTA license to export the US gas as LNG out of Costa Azul to all countries. Sempra has said it plans to procure feed gas from the Permian and San Juan basins in the US southwest using existing pipeline infrastructure.

Alfred Sorensen, chief executive of Goldboro LNG owner Pieridae Energy, told Argus that under the new policy nothing would prevent new LNG projects in Canada or Mexico from just using an FTA license.

"I guess they could not do that but run the risk," he said. "We thought about doing just that several years ago and customers would not take that risk so we got the permits instead."

He added that he "would be surprised if anyone with a reputation would go against the spirit of the law."

Bear Head LNG owner Liquefied Natural Gas Limited told Argus it will cooperate with the DOE to comply with requirements and is examining the policy change.

The DOE pointed out today that the US-based LNG export projects would not likely circumvent the spirit of current regulations as no busy LNG storage trading hub has been established in an FTA nation and LNG re-exports are typically not economic. But sending cheap US pipeline gas to Mexico or Canada for liquefaction and export likely would be economic.

The Washington-based industry advocacy group Center for LNG praised the DOE for the change, saying it would provide "greater certainty in a fast-growing global industry." But it did not immediately comment as to whether projects in Mexico or Canada could gain competitive advantages.

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25/04/10

Norway plans to cut GHGs, but remain oil, gas producer

London, 10 April (Argus) — Norway's government has proposed a greenhouse gas (GHG) emissions reduction of a minimum 70-75pc by 2035, from a 1990 baseline, but has also committed to the country remaining "a stable and predictable supplier of oil and gas produced with low emissions". The government today set out plans for a 2035 GHG reduction target, as well as a wider climate plan for the country. The 2035 GHG reduction targets build on Norway's 2030 goal of "at least" a 55pc reduction in GHGs, again from 1990 levels. Norway has a legislated goal of "a low-emission society" by 2050 — GHG reductions of 90-95pc from the 1990 baseline. Norway's government underlined its commitment to Paris climate agreement goals and phasing out the use of fossil fuels "towards 2050", but also said that it would "not prepare a strategy for the end phase of Norwegian oil and gas". "The government's plan is about phasing out emissions, not industries", it said, noting that Norway is "a significant contributor to Europe's energy security". Norway is the largest producer and only net exporter of oil and gas in Europe. "The government will further develop the petroleum industry and facilitate the future provision of fields… production will continue to be efficient and with low emissions," the government said. It aims for the country's oil and gas sector — the country's highest-emitting industry — to bring emissions from production to net zero in 2050. The bulk of oil and gas emissions are from downstream use — known as scope 3. Norway plans to achieve the majority of its proposed 70-75pc GHG cuts through national measures, including reduced fossil fuel use and both technical and nature-based carbon removals. It also plans to purchase emissions reductions from outside the EU and European Economic Area. This refers to internationally transferred mitigation outcomes (ITMOs) — emission credits — under Article 6 of the Paris climate agreement. Norway's parliament will consider the proposals. Once legislated in the country's climate act, Norway plans to communicate its updated plans to the UN. Signatories to the Paris climate agreement are expected to submit updated climate plans — known as nationally determined contributions (NDCs) — to UN climate body the UNFCCC every five years. The deadline for NDCs setting out climate goals up to 2035 was in February, but many countries have yet to submit plans . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump coal plant bailout renews first term fight

25/04/09

Trump coal plant bailout renews first term fight

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Leaderless S Korea faces energy policy uncertainty

25/04/09

Leaderless S Korea faces energy policy uncertainty

Any significant shift in nuclear policy may be detrimental to South Korea's power balance, regardless of who wins the upcoming election, writes Evelyn Lee London, 9 April (Argus) — South Korea's constitutional court has upheld president Yoon Suk-Yeol's impeachment over his short-lived imposition of martial law last year. The immediate impact of Yoon's removal on the energy market is limited, but the ensuing snap election could see a change in nuclear policy that may strengthen demand for thermal generation, particularly less carbon-intensive gas-fired power. Yoon's impeachment was upheld by a unanimous decision in the country's constitutional court on 4 April, essentially ending his presidency on account of the six-hour martial law he enacted on 3 December. The country will hold a snap election on 3 June to decide its 21st president, under a constitutional requirement for a successor to be elected within 60 days of the presidential office becoming vacant. The confirmation of Yoon's departure raises questions about the energy policies he had purs ued. Yoon put an end to former president Moon Jae-In's nuclear phase-out policy and resumed construction of the 1.4GW Shin-Hanul 3 and 4 reactors, which are currently scheduled to be completed in October 2032 and October 2033, respectively, according to operator Korea Hydro and Nuclear Power. Progress on the two facilities means construction is likely to continue even after Yoon's departure, but his efforts to extend operating licences for reactors that are nearing their designed life span may not get any further. But any significant shift in nuclear policy may be detrimental to South Korea's power balance in the coming years. Nuclear energy is set to account for 203.2TWh of the country's power supply by 2030, representing a 31.8pc share of the generation mix, according to Seoul's latest long-term power plan . Based on this, South Korea could have about 23GW of installed nuclear capacity in 2030, compared with 24.5GW at present. But eight reactors accounting for a combined 6.85GW of capacity are scheduled to reach their life span by 2030, according to Argus analysis, while only two 1.4GW reactors — Saeul 3 and 4 — are set to be brought on line before 2030 (see chart). At least 4.05GW of nuclear capacity needs to be approved for permit extensions in order for the 2030 installed capacity target to be met, Argus analysis shows, in line with the power plan's stipulation for "continued operation of existing nuclear plants whose operating licences expire within eight years", although it does not specify which units fall into this category. For comparison, South Korea's nuclear fleet was scheduled to have 20.4GW of capacity in 2030 under former president Moon's last power plan, released in December 2020, which assumed all expired reactors would be retired. Short on change South Korea may not be able to afford to phase out its nuclear fleet, at least for the next five years, regardless of who becomes the new president. Liberal opposition Democratic Party leader Lee Jae-Myung is regarded as the top contender to win the presidential election, with a double-digit lead in recent polls. It remains unclear whether Lee supports extending the life span of reactors that have expired, but he has previously shown support for maintaining nuclear plants that are in operation or under construction, instead of a complete phase-out of nuclear power. If Lee wins the election and decides to retire nuclear reactors when they reach their current life span, the role of LNG is likely to strengthen in the South Korean energy mix. Lee is well-known for his support of renewable power generation and building an "energy highway" by decentralising the country's power grid and expanding transmission lines, the latter of which could be more likely since the recent approval of South Korea's power grid revision bill . South Korea reactors under construction GW Name Capacity Completion Saeul 3 1.4 Feb-26 Saeul 4 1.4 Nov-26 — Korea Hydro and Nuclear Power South Korea reactors due to expire by 2030 MW Name Start up Estimated end date Capacity Kori 4 1986 Aug-25 950 Wolsung 2 1997 Jun-27 700 Wolsung 3 1998 Jun-28 700 Wolsung 4 1999 Sep-29 700 Hanbit 1 1986 Aug-26 950 Hanbit 2 1987 May-27 950 Hanul 1 1988 Aug-28 950 Hanul 2 1989 Sep-29 950 — Korea Hydro and Nuclear Power Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

What do tariffs mean for the global gas market?

25/04/09

What do tariffs mean for the global gas market?

Some countries are considering retaliatory tariffs, while others hope to reduce their trade deficit in order to negotiate lower rates London, 9 April (Argus) — Newly announced US tariffs on goods entering the country and some of the countermeasures already announced by large trade partners are unlikely to cause any direct disruptions to global gas markets. But the indirect effects on gas supply and demand may be huge, stemming from a weaker macroeconomic outlook, fuel substitution and inflationary pressures on infrastructure development. US president Donald Trump on 2 April imposed a minimum 10pc tax on all foreign imports from 5 April,with much higher tariffs on selected countries that briefly came into force on 9 April, before Trump announced a 90-day pause. China is the only exception. It has announced retaliatory tariffs that could disrupt US energy exports, resulting in an escalation that has already brought up the respective levies to 125pc in the US and 84pc in China. These are unlikely to have any direct impact on LNG trade flows, as China had already stopped importing US LNG earlier this year. But disruptions to trade between the world's two largest economies may weigh heavily on manufacturing activity in China, in turn reducing industrial gas demand. And the ripple effects of disruptions to US LPG exports to China may alter fuel-switching economics in the region and beyond. Most other countries in Asia-Pacific have opted not to follow China's lead by retaliating against US tariffs, even though many have warned about the potential for long-term economic disruption. The Japanese government intends to negotiate a better tariff deal and is considering investing in the US' proposed 20mn t/yr Alaska LNG export project as part of wider efforts to reduce its trade surplus with the US. Countries in Asia-Pacific have been hit with some of the highest of Trump's targeted duties. The EU is keeping retaliatory measures on the table, but these are unlikely to include any levy on US LNG. Europe has become much more reliant on LNG imports after losing the bulk of its Russian pipeline supply, and imposing tariffs on energy imports would only reignite inflationary pressures that European countries have tried to curb over the past three years. The bloc says it is ready to negotiate on possibly increasing its US LNG imports to reduce its trade surplus and would zero out its tariffs on industrial imports if the US agrees to do the same. But Trump says this offer is not enough, citing the EU's upcoming Carbon Border Adjustment Mechanism as one of the "unfair trade practices" that justifies a tariff response. Nerves of steel Much greater risks for gas markets may stem from rising infrastructure costs in the US' upstream and midstream sectors, particularly as a result of earlier tariffs imposed on steel and aluminum imports. These present an immediate risk for US LNG developers, particularly for the five projects under construction and the six others expected to reach final investment decisions this year. Metals account for up to 30pc of the cost of building an LNG export plant. An LNG terminal can cost $5bn-25bn to build, depending on its size, with steel used for pipelines, tanks and other structural frameworks. US facilities can be built using some domestic metal, but higher prices for this may lead to construction and final investment decision delays for the country's planned liquefaction projects. US tariffs' primary effect on the domestic gas market stems from duties levied on non-energy goods used by the oil and gas industry, including steel and specialised pipeline components such as valves and compressors, which are imported from overseas. The US remains a net natural gas importer from Canada , but these flows are unlikely to be affected by trade tariffs given the lack of alternative supply sources available to some northern US states. US LNG project pipeline mn t/yr Project Capacity Expected start/FID Under construction Plaquemines 19.2 2025 Corpus Christi stage 3 12.0 2025 Golden Pass 18.1 2026 Rio Grande 17.6 2027 Port Arthur 13.5 2027 Waiting for final investment decision Delfin FLNG 1 13.2 mid-2025 Texas LNG 4.0 2025 Calcasieu Pass 2 28.0 mid-2025 Corpus Christi train 8-9 3.3 2025 Louisiana LNG 16.5 mid-2025 Cameron train 4 6.8 mid-2025 Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

German coalition negotiations come to an end

25/04/09

German coalition negotiations come to an end

London, 9 April (Argus) — Germany's centre-left SPD and centre-right CDU parties announced a final coalition agreement today, which includes some changes to energy policy. The parties still need to sign off on the agreement. The SPD will ask its members to vote on the text, which it expects could take about 10 days. And the CDU plans to hold a small party conference on the topic at the end of this month, meaning that the new government could be sworn in by early May. The coalition still plans to abolish the gas storage levy "for all" as part of its plan to lower energy prices for households and industry. And the parties plan to introduce "suitable instruments" to ensure gas storage filling to safeguard security of supply in a "more cost-effective" way. There is a large focus on lowering energy prices for industry in the hope of turning the tide on Germany's continued industrial slump, for example through lower electricity taxes, a cap on power grid fees and special relief for energy-intensive industries "otherwise not reached by subsidy plans". The government plans to "make possible and flank diversified, cheap long-term gas contracts with international suppliers" and "use potentials of conventional domestic gas production". And while the government is "examining strategic state holdings in the energy sector, also with grid operators", it will reduce its shares in Uniper and SEFE — which it had acquired in the gas crisis in 2022 — to "strategic shares". The state needs to sell down its stake in the two companies by 2028 but will probably retain a minority share, with the EU allowing a maximum 25pc plus one share, energy ministry officials previously said . Support for gas-fired power The parties reiterated their commitment to encourage the buildout of up to 20GW of dispatchable power generation capacity, with no apparent requirement for the plants to be hydrogen-ready. The parties plan to put forward a bill to allow carbon capture and storage for hard-to-abate emissions from industry as well as gas-fired power plants "immediately after the beginning of the new parliament". The coalition said that the timing of the coal phase-out "has to be judged on how quickly it is achieved to build out dispatchable gas-fired capacities", but it still commits to ending coal burn by 2038. The government reiterated its plan to use grid reserve capacity to stabilise power prices rather than only to stabilise the grid during supply shortages. Associations have warned about the implications of letting grid reserve plants participate in the open market on investment incentives for new generation capacity. It also remains unclear how long it would take to get Brussels' approval for a new subsidy scheme for dispatchable power generation capacity, given that the EU approved the outgoing government's power plant strategy only after lengthy negotiations. Heating sector plan thin on detail The future of Germany's heating law remains unclear in the coalition agreement. The coalition agreement keeps the CDU's standpoint that the outgoing government's buildings energy act will be "abolished", which the SPD had not agreed with in the negotiation documents. But the parties said that a new buildings energy act will be more technology neutral and flexible, indicating that there will still be some legislation to reduce carbon intensity of the built environment. The parties propose a "reachable greenhouse gas avoidance" as the key variable of a new policy, instead of the percentage of renewable energy used in the system as under the existing law. This could end up supporting gas-fired over oil-based heating or providing an incentive to replace older gas boilers with newer models. But the government plans to retain subsidies for new heating systems and insulation measures, which provide large incentives for the uptake of heat pumps. Heat pump industry association BWP welcomed this commitment, combined with a pledge to reduce power prices by about €0.05/kWh, saying that these are "clear signals of an improvement in the framework conditions for the industry". The final coalition agreement again contains a reference to a possible green gas quota , which could support gas-based heating systems, for example through biomethane or hydrogen which could be used to fulfil the quota. The parties said today that they would work out a "roadmap for de-fossilised energy sources" and that it is important to "preserve gas grids which are important for a secure heat supply". By Till Stehr Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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