U.S. LNG Exports – The Wave of the Future

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As the world makes strenuous efforts to find new sources of energy, it is quite evident that  fossil fuels will be playing an unceasingly intense role in the foreseeable future. Within the hydrocarbon family the fastest growing is Natural gas.  Natural gas is set to become an indispensable factor in the world’s energy needs, particularly when it comes to countries like China and India. It is expected to contribute significantly to the nation’s growth, because domestic production and piped imports will not be able to keep pace with skyrocketing local demand. Therefore Liquefied Natural Gas represents the only opportunity to bridge this gap in the future as per the reports from Oil and Natural Gas Corporation (ONGC) and Boston Consulting Group (BCG). Dr A K Balyan MD & CEO Petronet LNG Limited mentioned in one of his articles that India is the 6th largest LNG importer, importing 13.5 MMTPA. India’s regasification capacity of 13.5 MMTPA is expected to touch 47.50 MMTPA by 2015-16.  This equation will proliferate with import liquefaction projects planned in America.

The United States is one of the key producers of Liquefied Natural Gas in the world. By exporting domestically produced LNG,  the United States will benefit in multiple ways. This will create more employment opportunities in the US, create greater tax revenues and provide considerable net benefits to the US economy. Larger the exports, greater the benefits. In any case, limiting the exports would never yield any positive results. This totally portrays the principle of comparative advantage. Natural gas supply has increased dramatically in the last few years courtesy the development of shale gas reserves. But the United States is missing an opportunity to export LNG to India, where production of natural gas is exorbitantly expensive. It is common knowledge that the cost of natural gas production and transportation in India is higher as compared to that of the United States.

Exporting LNG from the United States to India would have numerous positive impacts on the economies of both the nations. Expanding US LNG exports will provide the opportunity to strengthen ties with India and reduce trade deficits. In support of this stance, I would like to quote a statement by Deputy Chief of Indian Mission Taranjit Singh Sandhu, who says, “The prospect of increased Indian investments in the US natural gas market will push further a strong and mutually rewarding energy partnership as well further consolidate our strategic ties and deeper cooperation for the benefit of millions of people in both countries”.

USINPAC is taking strategic initiative towards working with offices of multiple Congressman and Senators to seek sponsorship of Bills H.R.2771 and H.R.6  that will expedite LNG exports to India and mark a new era in energy trade between the two largest democracies in the world.

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