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Opening up the prospects of export of shale gas to energy starved India, the US today granted conditional authorization 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 announced that that it has conditionally authorized 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 have already have an overwhelming stake in this Texas company, India is unlikely to benefit immediately from this grant of license.
But the decision paves the way for India, which does not has a FTA with the US, to get its companies seek similar licenses for import of much needed gas from the United States in large quantities from other terminals.
The existing federal law generally requires 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 authorizations 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 authorization 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 authorized 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.
Pushing for US export of shale gas to India, the Indian Ambassador to India, Nirupama Rao, in a recent talk at the American Enterprise Institute (AEI), had said that demand-supply gap of natural gas in India, which is estimated at around 2.2 trillion cubic feet (TCF) per annum presently, is likely to go up to nearly 4 TCF/annum by 2016-17.
The demand of natural gas is expected to be about 8 TCF/annum by the year 2030.
