HomeMediaLatest NewsA possible reason for restricting permits for LNG projects in the United States

A possible reason for restricting permits for LNG projects in the United States

26 January 2024

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to TASS on the causes and consequences of the ban imposed in the United States on the new export licenses issuance for LNG exports.

"It is possible that the pause in issuing permits is also related to concerns about the formation of a large and long-term surplus of global gas liquefaction capacity starting from 2026-2027, which experts have been talking about in chorus for several years. This threatens to drop global gas prices, especially for LNG, similar to the events of 2019-2020, when prices in Europe and Asia reached extremely low values. In addition, the full utilization of the built plants and their financial stability will be in question. The expected oversupply is mainly due to the United States, so it is quite reasonable to cool down the plans of the companies," Belogoryev believes.

However, the impact of the ban will be limited - it will not affect existing and already under construction plants, the expert stressed. At the same time, the conditions for issuing export permits will probably become tougher in the future, he believes.

According to Belogoryev, the growing demand for gas from LNG plants for the first time made domestic wholesale gas prices in the United States susceptible to price dynamics in international markets, which forces large consumers to lobby for restrictions on LNG exports, which have increased by 90% over the past three years.

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