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U.S. Department Of Energy Authorizes Freeport LNG Exports

Last week, the U.S. Department of Energy authorized Freeport LNG to export up to 2.14 billion cubic feet of LNG from the same-name facility in Texas “to any country not prohibited by U.S. law or policy” beginning in the third quarter of 2019 when the Freeport facility will begin exports.

The Energy Department release explained that the short-term order for Freeport LNG “allows for additional flexibilities to export LNG pursuant to short-term contracts and for the initial commissioning volumes from the project. Freeport will also still be able to export LNG pursuant to its long-term authorizations from DOE.”

Last week, Freeport LNG said it had sealed a long-term deal with a U.S. division of Japan’s Sumitomo Corp for the delivery of 2.2 million tons of liquefied natural gas annually over a 20-year period, Reuters reported.

The deal, to enter into effect in 2023 when the fourth liquefaction train at the Freeport facility is due to be completed, will be instrumental in providing the funds for the completion of the unit, which will have an annual capacity of 3.5 million tons of LNG. Now Freeport LNG needs to find long-term commitments for another 1.3 million tons of LNG to guarantee the construction of the fourth train. The first train should begin operating by the end of June 2019.

Liquefied natural gas exports from the United States began in 2016, and since then, the Department of Energy reports, total production has reached the equivalent of more than 1.3 trillion cubic feet of natural gas. The only two operating LNG export facilities in the country are Sabine Pass and Dominion Cove Point, with a combined capacity of 3.5 billion cubic feet of gas daily. So far, the government has approved long-term LNG export contracts to the tune of 21.35 billion cubic feet of gas daily.

By Irina Slav for Oilprice.com

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