US senators urge ban on gas exports to China, India

May 10, 2014, 5:35 am

US exports of natural gas to big energy consumers like China and India has elicited protests from US senators in Washington who say this could “squander” the “American competitive advantage”.

A group of 22 American senators have asked the US government to halt the large-scale exports to these Asian countries to prevent increase in cost for US consumers and businesses.

“Natural gas prices in Asia are currently three to four times higher than those in the US Integration of US and Asian natural gas markets through US exports could lead to further increases in prices for American consumers and businesses, which may fundamentally reverse many of the economic benefits that have led to the current surge in manufacturing job growth in the US,” the senators said in a letter to President Barack Obama.

“We must ensure that we do not squander what is clearly an American competitive advantage right now for American manufacturers and for the American economy,” they said.

China and India have recently made moves that indicate they could raise local gas prices which will pave the way for increased imports of liquefied natural gas (LNG).

Chinese and Indian gas demand is expected to soar in the coming decade.

A Reuters report quoted consultancy Tri Zen International that revealed India imported 15.17 million tonnes of LNG in 2012, which is expected to rise to 50 million tonnes by 2020. Demand in China, which bought 14.7 of LNG last year, is expected to hit 60 million tonnes by 2020, the report said.

The US senators on Friday said that “large-scale exports of natural gas to Asia could also jeopardize America’s goal of achieving energy independence, a goal made more achievable by the recent increase in domestic gas production”.

The senators urged Obama to consider the impacts on American manufacturing and families that rely on natural gas.

In the letter released to the press on Friday, they pointed to the hundreds of thousands of American manufacturing jobs created in the last few years, in part because of low natural gas prices.

“Families and businesses depend on affordable and reliable supplies of natural gas. This winter many parts of the country faced tight supplies of propane and natural gas and families were left to face high energy bills… Taking a longer-term view, the United States has benefited from rising supplies and lower prices for natural gas since 2008.”

The senators said that the recent approval for export of liquefied natural gas from a sixth export facility has meant that the total approved exports now exceeds the amount of gas currently being used in every single American home and commercial business.

The exports well exceeds the high export scenario referenced by a Department of Energy study in 2012 that indicated prices could increase by up to 54 per cent, the senators said, adding that it would translate into more than $60 billion a year in higher energy costs for American consumers and businesses, they said.

A recent report by the UK-based think-tank Overseas Development Institute (ODI) has, however, said China’s fracking revolution could see it reduce its gas imports by 40 per cent by 2020. Shale gas has been identified and listed as a priority in China’s 12th Five-Year Plan (2011-2015).

TBP and Agencies