US LNG exports blocked by regulations

Despite the undeniable success of American liquefied natural gas (LNG) in global markets, the recent policy of the Biden-Harris administration risks jeopardizing this hard-won position, says an article published on the website Zerohedge. While the US has been able to develop a complex infrastructure to become a leading LNG supplier, new regulatory measures may undermine this success, affecting the confidence of international partners and the ability of the US economy to thrive in the long term.

The liquefaction of natural gas is a sophisticated process, far from simple. Gas extracted from the ground must be transported immediately to a processing facility, then to a liquefaction unit where it is cooled to extremely low temperatures of minus 260 degrees Fahrenheit, turning it into a liquid. Afterwards, it is loaded onto specialized LNG carrier vessels and transported to other countries, where it is regasified to be used by domestic consumers, power plants and industries of various types.

This logistics network requires billions of dollars in investment, years of development and complex regulatory processes. Each shipment of LNG is the result of a collective effort over decades. And from the perspective of the American economy, these efforts are fundamental to maintain a relationship of trust with global partners and to guarantee continuity in supply flows.

The success of American LNG was evident during the energy crisis that followed Russia's invasion of Ukraine. Ships loaded with US LNG have helped Europe make up for Russian gas shortages, a key step in stabilizing prices and ensuring a steady flow of energy. However, that success was made possible by an infrastructure that began to take shape a decade ago at the end of a long and laborious regulatory process.

Despite these advances, the White House's decision in January 2024 to suspend most export approvals pending the completion of new economic and environmental studies raised serious concerns. This uncertainty can lead to increased costs, project delays and disruption of supply chains. Japan, one of the most important trading partners of the US, was the first country to raise alarm signs, signaling the risk of a possible loss of confidence in American suppliers.

Should these studies lead to substantial changes in the regulatory framework, the effects could be devastating for the LNG industry. A disruption of exports would generate a series of consequences in the chain, not only for the export sector, but also for the American domestic economy.

To protect this "generational opportunity", the next US president will have to revisit the decision to suspend export approvals, but carefully, to minimize the risk of potential lawsuits. In the long term, only Congress can guarantee a permanent solution that provides predictability and stability for this vital industry. In an ever-changing world where energy demand is increasing, it is crucial that the United States maintain a stable regulatory framework to protect the dominant position of US LNG and guarantee continuity of supply to international partners.