US should mull review of LNG export criteria on Ukraine turmoil

05 March 2014 22:30  [Source: ICIS news]

HOUSTON (ICIS)--The US should consider reviewing its criteria for issuing licences for exporting liquefied natural gas (LNG) to countries that are not members of free-trade agreements (FTAs), given the recent turmoil in Ukraine, the US secretary of energy said on Wednesday.

When issuing such permits to export LNG, the Department of Energy considers the effects on the nation's economy as well as on the national interest, said Ernest Moniz, energy secretary. He made his comments during the IHS CERAWeek conference.

Geopolitical considerations are among the factors that the DOE reviews under national interest, Moniz said. Despite the importance of geopolitics, the DOE does not determine where LNG cargoes would go under the permits.

"We have to talk about how we want to address this kind of issue," Moniz said.

Such a consideration would not require legislation, he said.

Concerns about energy security have risen following Russia's occupation of Crimea in Ukraine, a move decried by the US and western Europe.

However, any response from the West is constrained by European demand for Russian gas, which flows to the region from pipelines, many of which pass through Ukraine.

Russia has shut off gas supplies to Ukraine in 2006 and 2009 in disputes over prices.

LNG imports from the US could reduce some of the power that Russia holds over European consumers.

In the US, however, major consumers of the natural gas are wary about unhindered exports of the fuel, especially in the petrochemical industry.

The advent of shale gas has given those companies a cost advantage against much of the world. The industry is concerned that uncontrolled exports could reduce or even eliminate its cost advantage.

Several US petrochemical companies have formed a trade group, America’s Energy Advantage (AEA), to encourage the DOE to give LNG licences careful consideration.

IHS CERAWeek lasts through Friday.

By: Al Greenwood
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