The Biden administration’s decision to halt liquefied natural gas (LNG) export permitting sparked uproar among industry players last month, with Venture Global LNG labelling the move as sending a ‘devastating signal’ to US allies.
However, the Institute for Energy Economics and Financial Analysis (IEEFA) says that these fears ignore basic trends in global gas markets. As the role for gas shrinks in Europe amidst a rapidly accelerating transition to clean energy, the demand for US LNG has continued to fall in Asian markets.
It was discovered that major buyers of US LNG are not European or Asian consumers, but oil and gas traders aiming to profit from resale. The US pause aims to control LNG industry growth, not threaten global energy security, said IEEFA.
The need for energy security was highlighted after Russia’s invasion of Ukraine in February 2022, causing European countries to scramble for LNG to make up for lost supply.
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