President Trump has reversed the moratorium on new US liquefied natural gas (LNG) export licenses, fulfilling a campaign promise. This decision marks a significant shift in US energy policy and has implications for global energy markets.
Trump signing an executive order
The executive order mandates the Department of Energy to resume processing applications for new LNG export permits. The previous administration, under President Biden, paused these applications in January 2024 to assess the environmental, economic, and national security ramifications of increased US LNG exports.
A study published last month concluded that higher exports could lead to elevated natural gas prices for American consumers and contribute to a rise in global emissions. These findings posed a potential obstacle to swift permit approvals by the Energy Department. However, Trump’s order explicitly directs the department to weigh the economic and job creation benefits of approving new export permits alongside the “impact to the security of allies and partners.”
This policy reversal has significant implications for companies like Venture Global LNG Inc., Energy Transfer LP, and Commonwealth LNG, whose multi-billion-dollar export projects were stalled by the moratorium.
Impact on Global LNG Markets
Japan, a key importer of US LNG, is closely observing the implementation of this new policy. Trade Minister Yoji Muto, in a recent press conference, acknowledged the potential influence on the global LNG market.
“We recognize that it could have an impact on the global LNG market, where supply and demand are structurally tight, and that it could increase supply and contribute to stabilizing the market,” Muto stated. He further added that this move could enhance the predictability of Japan’s LNG procurement. This suggests that increased US LNG exports could alleviate some of the supply constraints in the global market and potentially moderate prices. The decision also reinforces the US’s role as a major player in global energy markets.
Conclusion: A New Era for US LNG Exports?
The lifting of the moratorium signals a potential surge in US LNG exports, with substantial economic and geopolitical consequences. While the long-term effects remain to be seen, this decision underscores the Trump administration’s commitment to expanding US energy dominance. This move may reshape global energy dynamics and influence the strategic relationships between the US and its allies.
