US approves LNG export plant

By a staff reporter

In a sign that the administration of United States President Barack Obama views the potential benefits of exporting gas as outweighing a policy of favouring domestic markets, the US government has approved a second terminal to export liquefied natural gas (LNG).

In a statement, the US Energy Department said it has issued preliminary authorisation to two firms to export as much as 1.4 billion cubic feet daily of LNG from a facility in Quintana Island, Texas.

The existing facility is a joint venture between ConocoPhillips and a group of private investors.

Approval is still required from the Federal Energy Regulatory Commission before the partners can convert the existing facility from an LNG import facility to be capable of handling LNG exports.

It marks only the second time a US company has been approved to export LNG, and leaves 19 other LNG export applications still to be determined. The approval is necessary to allow facilities to export LNG to countries with which the US does not have a free-trade agreement.

The US shale gas boom has sparked a debate about the balance the country can find between serving its own domestic markets to reduce the country's dependency on energy imports and the economic boost associated with developing export markets.

The outcome is expected to impact Australian LNG exporters, as US exports would compete with Australian LNG in Asian markets.