* Petrochemical, refinery sectors to gain from export caps
* U.S. still expected to export 40-80 bcm/year
* Most of U.S. exports to go to Europe
* Asia to benefit from ripple effect
By Henning Gloystein
LONDON, June 8 Industrial lobbying in the United
States is likely to put a cap on potentially huge natural gas
exports, benefiting domestic industries such as petrochemicals
and refining, but limiting export profits from gas-hungry Asia
The U.S. has experienced a boom in shale gas exploration,
which will potentially turn it from a net importer of natural
gas into a gas exporter. Several companies have applied for
licences to export excess domestic reserves to Europe and Asia.
Baringa, a London-based consultancy with a focus on energy,
said that between 40 and 80 billion cubic metres (bcm) of
liquefied natural gas (LNG) will be exported each year, starting
These figures are below some estimates that expect U.S. LNG
exports to rise above 110 bcm by 2020, but Baringa's Jayesh
Parmar and other analysts have said that political pressure
could limit export capacities.
"There is a lot of lobbying in the U.S. to limit LNG exports
and to instead use the gas to allow the domestic industry to
benefit from low energy prices," Parmar told Reuters.
"Petrochemicals and refined products, as well transportation
industries that use natural gas, stand to gain from such a
policy, and this could change the entire oil balance in the U.S.
A report this week by Eurasia Group, the New York-based
political risk consultancy, said: "Resource nationalism is the
biggest political risk to U.S. LNG (exports), with many
opponents to exports concerned about the impact on domestic
natural gas prices."
SIGNIFICANT IMPACT IN EUROPE
While reduced LNG exports from the United States may mean
that some of the proposed export terminals will not receive
government approval, the volumes are expected to be sufficient
to affect gas markets.
Baringa said that 40-80 bcm of annual export capacity "might
not be massive on a global scale, but on a European scale it
would have significant impact when compared with Britain's
annual consumption of 100 bcm."
Parmar said that exports would begin around 2015 and
gradually rise to their peak as new export licences for LNG
terminals become available. "We expect around two or three (out
of five) currently proposed U.S. LNG export terminals to go all
the way to exporting gas," he said.
So far, only Cheniere Energy's LNG plant at Sabine
Pass, Louisiana, has export approval from the Federal Energy
Regulatory Commission, which will pave the way for construction
of a shipping terminal as early as 2015. Customers from Europe,
India and South Korea having signed long-term supply deals with
Since giving approval for Sabine Pass, the U.S. government
has suspended decisions on expanding U.S. gas exports until a
study on the price impact on domestic consumers is completed
Although Asia would be the most profitable LNG export
market, Baringa said that the majority of U.S. tankers would end
up in Europe because most of the export terminals will be in the
"Most LNG export terminals will be in the Gulf of Mexico or
on the U.S. East Coast, so physically it is hard for that gas to
be contracted with the most attractive market (Asia)," Parmar
"The contractual flow of the incremental LNG from the U.S.
exports might head to Asia. Given the location of the export
terminals, the physical flows may well stay in the North
Atlantic but result in displacing other LNG flows so that the
effect would be increased delivery into Asia."
Parmar also said that while U.S. gas exports would impact
global prices, they would not entirely wipe out the massive
price differentials between gas prices in North America, Europe
U.S. natural gas prices currently trade at about $2.5 per
million British thermal units (mmBtu), Europe's around $9 and
Asia's above $18 per mmBtu.