US removes requirement for separate long-term and short-term LNG permits to give spot market flexibility

Monday, 11 January 2021
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The US Department of Energy has removed the requirement for long-term LNG export authorization holders to seek separate short-term permits to export volumes, boosting the flexibility of US companies in the spot cargo market.

By consolidating this authority in a single authorization without any increase in total approved export volumes, the DoE said it was a move to streamline its regulatory process.

“This policy is a sensible and concrete way DoE can remove unnecessary regulatory burdens for LNG exporters,” said Secretary of Energy Dan Brouillette.

“Those exports bring benefits to our economy, while also helping to reduce global emissions,” added Brouillette in reference to US shipments to Asia helping to enable the switch from coal to gas.

The DoE believes that this deregulatory measure would lead to administrative efficiency.

It would also remove a duplicative requirement for exports of LNG to have DoE authorization for the short-term market, where the authorization holder already has long-term export authority.

Concurrent with this policy statement, DOE added that it was amending several long-term LNG export orders to add short-term export authority to the long-term orders.

“We are increasingly seeing more sales of LNG on the spot market, and this action by DoE is allowing more flexibility for US LNG exporters,” explained Deputy Secretary of Energy Mark W. Menezes.

“With this policy, US LNG exporters can let the market - not our regulatory process - determine which LNG cargos will be exported under long-term or short-term agreements on the spot market,” stated Menezes.

Acting Under Secretary of Energy and Assistant Secretary for Fossil Energy Steven Winberg said LNG export policies should support the market aims of US companies.

“We want to have a sensible regulatory system that takes current market realities into account, and this policy statement does just that,” added Winberg.

At the start of January 2021, the DoE also issued its fourth set of LNG export authorizations through to 2050.

This action followed several LNG export term extensions issued since October 2020 pursuant to its global export policies.

The latest term extensions were given to the Southern LNG export facility operating in Georgia, the Elba Island plant, as well as Sempra Energy’s Cameron facility in Louisiana.

The new permits have also been given to the Annova LNG project proposed in Texas and Eagle LNG’s two small-scale facilities in Florida, including the Maxville facility currently in operation.

These issuances extended each project’s long-term LNG export authorization to non-free trade agreement (non-FTA) countries through December 31, 2050. 

Term extensions now apply to permits now held by 18 US LNG export projects, as well as the Costa Azul project in Mexico. 

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