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The Department of Energy has removed a requirement that says U.S. LNG exporters need to report what the final destination of the cargo is in a bid to facilitate greater LNG exports. The change was praised by the LNG sector as it would indeed serve to make life easier for exporters.
S&P Global Platts notes that it would enhance exporters’ chances of securing more buyers for the commodity as they would not have to worry about risking their export authorization in case it is impossible to find out where the cargo would eventually end up.
The scrapping of the reporting rule, according to Energy Secretary Rick Perry, would "better provide reliable US LNG to our friends and allies abroad."
From now on, the Department of Energy would only require exporters to report the initial destination of their cargoes, Argus Media reports, noting the change created some confusion in the industry.
Originally, the requirement was put in place to prevent future LNG facilities in Canada and Mexico to gain an unfair advantage over U.S. LNG. Yet the Department of Energy said the concern was too minor to matter right now, and that the outlook for the future was positive.
Argus Media explains that the hypothetical advantage of Mexico and Canada is related to a requirement for the DoE to approve LNG and pipeline gas exports to countries that have a free-trade agreement with Washington. Canada and Mexico are such countries, but the same is not true for most of the biggest LNG importers.
That compromises LNG exporters’ chances of long-term buyer commitments since there is concern the Department of Energy, which has the right to rescind or modify LNG export licenses, would use this right in case domestic natural gas prices increase and more gas needs to stay in the United States
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.