US energy industry must oppose efforts to restrict LNG exports:
Exxon
Houston (Platts)--20Mar2013/606 pm EDT/2206 GMT
The US energy industry must vigorously oppose efforts to restrict
exports of liquefied natural gas, ExxonMobil Chemical President Stephen
Pryor said Wednesday at the IHS World Petrochemical Conference.
As the US Department of Energy considers applications to export LNG to
non-free trade agreement nations, lobbying from some of Exxon's
petrochemicals rivals as well as utilities for a block on such trade has
ramped up.
With lots of supply and relatively low natural gas prices, US petchems
companies in particular are enjoying a cost advantage over their
overseas competitors if they use gas as a feedstock.
It is the first time in many years that they have enjoyed such a cost
advantage, and they fear it will not last if significant LNG exports are
approved.
"These proposals to block LNG investments ... represent a selective and
harmful departure from the free market and free trade principles," Pryor
said.
Calling the proposals an affront to US trading partners, Pryor said such
protectionist measures would undermine efforts to build closer trading
ties and hurt domestic markets as well.
"For example: Why should the EU block tariffs on American chemicals made
from advantaged natural gas, if the US blocks exports of that gas in
liquefied form?" Pryor said.
"Likewise, how can the US secure sanctions against China for restricting
exports of rare-earth minerals, without inviting sanctions on the US for
restricting exports of natural gas? And how can the US ask Japan, a
close ally still suffering from energy shortages, to stop importing oil
from Iran, if we prevent Japan from importing gas from the US?" he
added.
ExxonMobil is one several oil and gas majors planning to export LNG as a
way to relieve the glut of gas in the US caused by increased production
from shale plays. US proven reserves of gas have increased nearly 50%
since 2005, Pryor said.
Other companies seeking to export LNG include Shell, Total and BP. In
all, the Department of Energy has received 25 export applications.
ExxonMobil wants to export LNG through the Golden Pass terminal, a joint
venture located in Sabine Pass, Texas, whose shareholders include Qatar
Petroleum, which is the majority partner, and ConocoPhillips.
Pryor pegged the cost of the project, which aims to retrofit an import
terminal as an export hub by installing up to 2.6 Bcf/d of liquefaction
capacity, at $10 billion.
Restricting LNG exports would go beyond affecting trade relationships,
Pryor said. It could return the US to the days of price controls in the
1970s and 1980s, which caused drops in production and supply shortages,
he said.
"Protectionist pleas are often wrapped in pious appeals to nationalism,
but the real agenda is to unlevel the playing field and stifle the
competition," Pryor said, adding: "As an industry we must vigorously
oppose protectionist measures that limit access to markets around the
world. We must also promote free-trade initiatives.
"Likewise, we must oppose protectionism in our home markets, such as
calls to restrict natural gas exports," he said.
--Bernardo Fallas,
bernardo_fallas@platts.com
--Edited by Keiron Greenhalgh,
keiron_greenhalgh@platts.com
© 2013 Platts, The McGraw-Hill Companies Inc. All rights reserved.
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