Last week Reuters reported, "A free trade agreement between the United States and Europe could open new markets for domestic natural gas, but without access to big growth Asian markets there still may not be enough demand to launch the export revolution that the industry desires. Obama, in his State of the Union speech, said the United States wants to foster closer trade relations with Europe, sparking speculation that an FTA could create an easy path to shipping liquefied natural gas (LNG) to the continent. Morgan Stanley energy analysts this week said an FTA could quicken the timeline for LNG projects targeting Europe and even increase volumes heading there. But other experts say few, if any, of the more than a dozen planned U.S. projects will go ahead before they receive approval to export gas to major buyers in Asia such as China and India, which do not have FTAs with the United States.
“Global LNG operators need access to 100% of the markets. Restricting the trade would reduce the value of the U.S. supply," said Lafayette Herring, an LNG analyst at Waterborne Energy consultants in Houston.
U.S. LNG exports are tightly restricted and projects must be approved by Washington. Deals to ship to FTA countries are typically rubber-stamped; only one project has been approved to export to a non-FTA country, amid concerns about driving domestic prices too high. FTA nations that import LNG represent 20% of global demand, according to Waterborne, most of which is made up by the world's No. 2 LNG importer, South Korea. Adding Europe to that list would bring it up to 50%. Financing of export projects, which cost billions of dollars to build, hangs on companies securing supply deals. Such deals are far more likely if all the world's importers can be approached. Without deals, it becomes very difficult to convince investors that the project will make money. At stake is the fate of proposed projects run by Royal Dutch Shell, Exxon Mobil, Sempra Energy and other smaller ventures. Some experts said that projects hoping to export from the United States will already be under construction by the time any trade deal with Europe is formalized.