Opening up the prospects of export of shale gas to energy starved India, the US has granted conditional authorisation to export domestically produced liquefied natural gas (LNG) to nations that do not have free trade agreement (FTA) with it.
In a decision, which has major implications for India, the Department of Energy has announced that that it has conditionally authorised Freeport LNG Expansion, LP and FLNG Liquefaction, LLC (Freeport) to export domestically produced LNG to non-FTA countries from Freeport Terminal on Quintana Island in Texas.
Given that the companies from countries like China, Japan and Britain already have an overwhelming stake in this Texas company, India is unlikely to benefit immediately from this grant of licence.
But the decision paves the way for India, which does not have a FTA with the US, to get its companies seek similar licences for the import of much needed gas from the United States in large quantities from other terminals.
The existing federal law generally requires the approval of natural gas exports to countries that have an FTA with the United States.
For countries that do not have an FTA with the United States, the Natural Gas Act directs the Department of Energy to grant export authorisations unless the department finds that the proposed exports “will not be consistent with the public interest’’.
In its 132 page order, the Department of Energy said that the proposed exports are likely to yield net economic benefits to the United States.
“We further find that granting the requested authorisation is unlikely to affect adversely the availability of natural gas supplies to domestic consumers or result in natural gas price increases or increased price volatility such as would negate the net economic benefits to the United States,” it said.
Freeport facility in Texas, the Department of Energy said, is conditionally authorised to export at a rate of up to 1.4 billion cubic feet of natural gas a day (Bcf/d) for a period of 20 years.