The United States Department of Energy (DOE) recently announced that it proposes to revamp the order in which it will process applications to export liquefied natural gas (LNG). The DOE also stated that it will conduct a further economic study of potential US LNG exports. Under the proposal, the DOE would not review an application to export LNG to countries that do not have a free trade agreement (FTA) with the United States until after the Federal Energy Regulatory Commission (FERC) concludes its environmental assessment of the associated export facility. Thus, if the proposal is adopted, the DOE will review non-FTAexport applications on a first-ready basis, instead of its current first-in-queue basis. The DOE stated that this change will allow it to “prioritize resources on the more commercially advanced projects.” The Notice of Proposed Procedures for LNG Export Decisions is now subject to a 45-day public review and comment period.
Under the Natural Gas Act (NGA), the DOE authorizes the export of natural gas unless it determines that the proposed export is “not consistent with the public interest.” Exports to countries that are party to a free trade agreement with the United States are statutorily deemed in the “public interest” and are allowed to sidestep DOE review. However, many major LNG importers, such as Japan, are not presently parties to a free trade agreement with the United States.
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