London analyst predicts lobbying will put cap on U.S. LNG exports

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(Reuters; 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 and Europe, said Jayesh Parmar, of Baringa Partners, a London-based management consulting firm that focuses on energy issues.

The United States will export between 1.4 trillion and 2.8 trillion cubic feet of gas as LNG each year, starting from 2015, Parmar told Reuters. "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. ... 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. economy."

Although Asia would be the most profitable LNG export market, Baringa said the majority of U.S. tankers would end up in Europe because most of the export terminals will be in the Atlantic basin. "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."

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