Freight rates for shipping US LNG to Asia will fall once the Panama Canal congestion eases in early February 2021. However, analysts expect Northeast Asia’s call on US supply will fall as the region burns less gas for power generation and relies more on rival supplies from Australia or Middle East.
Former Alaska Governor Bill Walker and the ex-head of the state-backed Alaska Gasline Development Corp. (AGDC) and its LNG project, Keith Meyer, have set up a company and offered to take over the export venture. AGDC is currently vetting buyers and aims to transfer the project to a private entity by June 2021.
Sempra Energy affiliate, ECA Liquefaction, together with Total have agreed a five-year loan with a variety of banks for up to $1.5805 billion to underpin Costa Azul LNG export project in Mexico. The financing has three tranches, linked to the commitment of each joint venture partner.
Though US President Joe Biden is determined to “radically alter American energy policy” and pledged a ban on new leasing, the controversy with Germany over Nord Stream 2 is unlikely to disappear.
The disputed Nord Stream 2 pipeline that runs between Germany and Russia through the Baltic Sea, for example, has been a favourite target of the Trump administration – but the sanctions imposed on it were also backed by the Democratic congress. Similarly, US pressure to increase its footprint on European gas markets through an import terminal for shipped LNG in Germany, will persist also once the new administration takes over.
Germany "not a hurry" to import US LNG
Start-up of the second Nord Stream leg would increase the pipeline’s overall transport capacity to nearly 99 bcm per year which is bound to greatly reduce Germany’s need for LNG imports.
Low prices for pipeline gas imports have rendered the economics of building a German LNG import plant less attractive. The Government’s maritime coordinator, Norbert Brackmann, said companies are moving forward with their investments, though "not in the greatest hurry."
Trump has been brand-marking both NordStream and TurkSteam as “the Kremlin's key tools” to exploit and expand European dependence on Russian energy supplies. “Get out now or risk the consequences,” he said when announcing the U.S. Department of State was updating public guidance for the ‘Countering America's Adversaries through Sanctions Act (CAATSA)’ authorities to include these projects.
Botas and Gazprom, meanwhile, are trying to calmly continue with works on the second leg of the controversial TurkStream pipeline. The Russia-Turkey interconnector through the Black Sea consists of two 930-kilometer offshore lines through the Black Sea as well as two separate onshore lines that are 142 and 70 kilometres long and extend to Greece and Bulgaria.
Mexico’s Epclion LNG project, owned by Singaporean investors, has been authorized to import pipeline gas to Mexico and re-export it as LNG to nations without a Free Trade Agreement with the United States for a period of 20 years. The Sonora-based project will have two liquefaction Trains and will be named ‘Amigo LNG’.
The US Department of Energy (DoE) has extended the terms of seven long-term LNG export authorizations through 2050 to help preserve what it said was “a vital energy source for its friends and allies.” The permits include Golden Pass, Texas LNG, Magnolia and Delfin LNG.
The US Department of Energy (DoE) has issued a rule to exclude some licensing and environmental requirements for liquefied natural gas export projects that had previously been required in a show of support for the energy industry by the outgoing Administration of President Donald Trump.
The rule, which the Department of Energy issued in a pre-publication notice in the Federal Register, frees LNG export and import license applications from including environmental reviews that had been required under an environmental law, the National Environmental Policy Act.
The DoE said it was updating its National Environmental Policy Act (NEPA) implementing procedures pertaining to authorizations issued under the Natural Gas Act.
“These changes will improve the efficiency of the DoE decision-making process by saving time and expense in the NEPA compliance process and eliminating unnecessary environmental documentation for these actions that the DoE has determined normally do not have significant effects,” said the filing to be published in the Federal Register on December 4, 2020.
The DoE said in the notice that the rule would “save time and expense in the NEPA compliance process”. The rule is effective 30 days after December 4 Federal Register publication.
President Biden could overturn DoE ruling
Analysts said there was a possibility that the incoming President Joe Biden could overturn the DoE ruling. President Trump was keen to supply US allies with LNG and the largest recipients of cargoes have been to countries like South Korea and Japan as well as European countries which have been taking US LNG cargoes as an available alternative to Russian pipeline natural gas.
The DoE rule would not affect environmental reviews by the Federal Energy Regulatory Commission, the other government office that reviews LNG projects.
Nine shale gas producers in the US Appalachian Basin have spent half a billion dollars more during Q3-2020 on drilling and new projects than they earned. According to the Institute for Energy Economics and Financial Analysis (IEEFA), eight of these nine fracking companies cut Capex substantially but still incurred losses.