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Qatar, ExxonMobil joint venture wins its first U.S. LNG export permit

Sunday, 07 October 2012 | 00:00
Qatar’s Golden Pass Products LLC received permission to export liquefied natural gas from the U.S., in what may become the Persian Gulf state’s first venture for selling LNG produced in another country.
The Energy Department permit will allow Golden Pass, owned 70 percent by state-run Qatar Petroleum International and 30 percent by ExxonMobil Corp., to export the chilled fuel to nations that have free-trade agreements with the U.S., according to a statement posted on the company’s website.
The partners will make a final decision about the proposed $10 billion export project after receiving regulatory approvals, the venture said. The investment would pay for liquefaction plants with 15.6 million metric tons of annual capacity to be added to the existing Golden Pass LNG import terminal in Texas. Qatar is the world’s largest producer of LNG.
“The Qataris have been trying for at least a year now, looking at LNG outside of their country,” Robin Mills, the head of consulting at Dubai-based Manaar Energy Consulting and Project Management, said by phone.
Golden Pass is “the most advanced” of the projects Qatar is pursuing elsewhere, he added. “As the world’s leading LNG player, it makes sense for Qatar to understand what’s going on and maybe influence things” in the emerging U.S. LNG market.
Qatar formed Golden Pass anticipating that the U.S. would become more dependent on imports of the fuel. A surge in domestic production of natural gas from shale rock instead cut U.S. gas imports by 17 percent from 2006 to 2011 and helped pushed down prices, according to Energy Department data. Qatar has redirected supplies originally intended for the U.S. to Asian markets where buyers are willing to pay more.
The emirate joins companies such as Cheniere Energy Inc., Sempra Energy and Dominion Resources Inc. in seeking to export LNG from the U.S. to take advantage of higher prices elsewhere. U.S. natural gas prices averaged $2.96 per million British thermal units in July, or 16 percent of Japan’s average LNG import price, according to New York futures prices and data compiled by Bloomberg.
Japan paid $18.07 per million Btu for LNG in July, the highest since at least 2006, when Bloomberg began collecting data. The country has increased imports of the fuel to run power plants after shutting nuclear reactors following the March 2011 earthquake and tsunami.
The expansion of Golden Pass would require five years to complete, said the venture, which also plans to apply for permission to export fuel to countries lacking free-trade pacts with the U.S.
Qatar will have to wait until U.S. President Barack Obama rules on whether to allow construction of additional export terminals for LNG, a decision expected by year-end, Barclays Plc said in June, citing Heather Zichal, the administration’s deputy assistant for energy and climate change. The U.S. suspended issuing permits for exports to countries without free-trade agreements after some fuel users and Democrats in Congress said sales abroad might lead to an increase in domestic prices.
Qatar started its 14th liquefaction plant last year and currently does not plan to add any more capacity amid a moratorium on further development of its North Field, which extends into Iran’s South Pars to form the world’s biggest gas reservoir.
Source: Bloomberg
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