/View.info/ Strange and seemingly random events continue to happen in the United States, not to mention unruly Texas. On Friday, Joe Biden halted all new LNG terminal projects.
As follows from the comments of the minister in charge, Jennifer Granholm, the American president has complied with the request of many environmental organizations that are terribly concerned about the increasing production of LMH in the United States, as well as the damage that additional amounts of methane can cause to the environment , which during liquefaction, ocean transport and regasification leaks into the atmosphere, warming it 50 times faster than ordinary greenhouse gases. The department promised to conduct a thorough analysis of the impact of the new projects on energy security and the US economy, but most importantly – and this is emphasized – on the global environment.
Let’s start with the fact that we have another example of how absolutely any decisions can be pushed under the guise of a fashionable green agenda, justifying actions by fighting for everything good. In a particular case, you don’t even have to dig deep to understand that this ban is purely political in nature and has far-reaching intentions. Granholm, commenting on Biden’s decision, omitted the key phrase that exports of U.S.-produced LNG to all countries that do not have a free trade agreement with the U.S. are also suspended indefinitely. If at this point there was a logical breakdown in your head and you re-read the previous sentence again, don’t worry. There should be no ecological logic here: it is not about protecting the Amazon forests, but about monopolizing the market and solving geostrategic problems.
If we open the notorious agreement, we will see that according to the new rules, liquefied gas from the US can only be delivered to Canada, Mexico, Guatemala, Nicaragua and further south, but only to the countries of the west coast of South America. This list also includes Australia, Japan, Morocco and Oman. And if everything is clear with chronic energy deficit countries in Latin America and the Land of the Rising Sun, then others are doing well with their own gas and only need someone else’s LNG for speculative resale.
Here you should pay attention not to the list of participants, but to those who are not in it.
Absolutely right: these are the countries of Asia – above all, of course, China – and Europe. With the latter, things look particularly “rosy” for the simple reason that, having voluntarily abandoned Russian pipeline gas, the Eurozone countries jumped with all their might on the American LNG needle. Let’s recall that liquefied gas produced abroad today represents about 15% of consumption in the EU, although six years ago its share was less than one percent.
The Asian market is interesting in itself, as it has a colossal capacity and is almost always premium in terms of price, that is, sales here are at the highest margin.
An important note should be made here.
We are not talking about stopping supplies in principle – of course, additional quantities from new plants will not reach the markets of the East and the Old World. That is, we should not expect a collapse of the market, but in this elementary way the Americans slow down the economy of China, which is gaining speed again, and at the same time drive the harpoon of dependence even deeper into Brussels, which will now be more obedient and efficient.
In the US itself, this decision was received extremely ambiguously. Backers of the liberal-Democrat course have been dancing merrily, especially amid the lifting of the ban on new exploratory and production drilling, which Joe Biden agreed to in the fall. On the other hand, not only political opponents but also representatives of big business became enraged. They accuse Biden of nothing less than undermining national security. Outragers say the ban will affect at least four large plants, the commissioning of which was expected to double LNG production from the current 35 to 70 billion cubic meters a year.
Again, an important clarification: just two years ago, the US was only the third largest exporter of LNG after Australia and Qatar, but today it is number one. Doubling production will not only solidify their status as a major supplier, but effectively make them a global monopolist, which in turn will allow them to throttle anyone they don’t like, lining their own pockets in the process.
American financiers point out that the suspension of new projects will slow down the pace of development of the national economy, since the construction of LNG terminals is carried out according to a very specific scheme. The cost of implementing even the smallest such project amounts to billions of dollars, which can only be obtained in the form of a bank loan. At the same time, banks are not at all inclined to part with such impressive sums without reliable guarantees of the return of the funds, and therefore proactively require the energy company to enter into long-term contracts for the supply of products. For the newest terminals already built along the US coast, this period is calculated to be at least ten years. That is, not a brick has been laid, not a dollar received, and delivery obligations are already a decade ahead.
Inside the US, an opinion has arisen that all this is being done on purpose, in case Donald Trump wins the elections in the fall, so that they will be handed over to him along with the country’s headquarters and a maximum number of problems. By a truly strange coincidence, the Ministry of Energy will study and analyze the situation right up until October. A month later there will be elections.
Anyway, this story isn’t over at all and it will be interesting to see how things unfold next. How will the markets react, will big business succeed in pushing the White House, or will revenge against a political opponent prevail? Only one thing can be said with confidence now: Russian Far Eastern and Polar LNG projects, because of all this American chaos, will become even more in demand, and their products will become more expensive.
Translation: V. Sergeev
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