US needs to up its game, says GlobalData

According to Carmine Rositano, a managing analyst at GlobalData, the global LNG capacity is set to increase at an average 10% a year from 2013 to 2017. Meanwhile, the US LNG capacity will be competing with new liquefaction coming online in Papa New Guinea and Australia, with Gladstone, Gorgon, Wheatstone and Queensland terminals increasing Australia’s LNG capacity by 10 billion cubic feet per day over 2013 levels.

In addition, GlobalData forecasts that the US liquefaction will only have a 5% share of the global LNG capacity in 2017, while Australia and Qatar will have 20% and 16%.

“Asia will remain the key market for LNG, but other areas, such as Europe, will increase their LNG imports as they seek to reduce their dependence on gas supplies from Russia,” said Ms Rositano.

But getting all the necessary local, state, environmental and federal approvals, to export LNG is proving difficult. A key disadvantage is that exports from US facilities can only be sold to countries with Free Trade Agreements (FTAs).

To date, over 30 applications have been filed with the Department of Energy (DOE) to sell LNG. However, only seven terminals have been approved to export LNG to non-FTA countries and only one facility, the Sabine Pass LNG Terminal, has received all necessary approvals.

“Being able to sell LNG to non-FTA countries, such as China, Japan, Taiwan and India, is critical to success since these are key markets in the growing LNG trade. Without this approval, commercial risks would be increased and projects would be deemed commercially unviable,” explained Ms Rositano.

“With economic advantages and reduced geopolitical risks on the line, there is an evident need to fast-track LNG projects, allowing the US to maximise benefits from its domestic energy resource base,” she added.