In just a few weeks a major step change in the world energy order will take place and the main response from many will likely be either a yawn or a shoulder shrug.

Such reactions are understandable, given how the US public’s attention is now being bombarded with other news, both foreign and domestic. It would be a mistake, however, to underestimate how important the long-term benefits of liquefied natural gas (LNG) exports are to the US economy, and how powerful a weapon of economic diplomacy it may become in future decades.

Even as we speak, natural gas is being piped into an LNG plant at Sabine Pass, Louisiana, where next month, the plant’s owner Cheniere will super-cool the gas to minus 162 degrees Celsius and load it onto an LNG tanker whose destination will likely be Asia. The transaction will be the first of what is certain to become thousands of shipments worth hundreds of billions of dollars of natural gas exports over the coming decades.

The North American natural gas story of the past decade is well-known and can come across as almost too good to be true. The integration of two separate technologies – hydraulic fracturing and sideways drilling – starting around 2005 spawned an explosion of gas supplies from states such as Pennsylvania, Texas and Colorado that has given the US more than 100 years of supplies at current usage rates.

But having surplus domestic gas in the ground for decades doesn’t explain why investors along the Gulf Coast and Chesapeake Bay are investing $50 billion to build export infrastructure to send liquefied natural gas all over the world. Nor is it simply luck that global demand for natural gas grew dramatically in the 2000s while liquefaction capacity lagged behind.

Such a story is incomplete without an understanding of how the US, in its role as a diplomatic superpower, kept Iran from developing its LNG export industry for the past 15 years, which in turn gave its own extractive industries an opportunity to fill the market demand that would have instead been available for Iranian LNG exports.

Bonanza Deferred

In this way, the Iran nuclear agreement signed in July is the denouement of a 30-year diplomatic war that Iran was forced to fight on ground the US had chosen within the halls of the US Congress and the United Nations Security Council.

Ever since the discovery of South Pars, the world’s largest natural gas field, in 1990 off the coast of Iran in the Persian Gulf, Iran has been trying to develop the massive resource that would first supply domestic needs and then export gas to Asia and Europe. Its cross-Gulf neighbor Qatar, which shares the same massive gas field, was able during that same period of time to become the largest natural gas exporter in the world, exporting 10 bcf a day, and gaining the title as having the highest per capita national income in the world as a result.

But the awful US-Iran relationship that had developed in the wake of the 1979 Islamic Revolution kept any similar development from happening in Iran. In 1995, Iran’s President Hashemi Rafsanjani attempted to thaw relations with the West by offering a $1 billion contract to the US oil company Conoco that would likely have leveraged Conoco’s LNG proprietary technology. It was the most lucrative oil deal Iran had ever offered any foreign company.

But US politics would have none of it. Congress first passed and then President Bill Clinton signed the Iran and Libya Sanctions Act (ILSA) in 1996 that targeted European and Asian firms investing more than $20 million for the development of oil in Iran.

While ILSA did not explicitly ban investments in LNG, it made those investments more challenging. More rounds of sanctions during the George W. Bush administration ultimately scared away European companies Royal Dutch Shell, Spain’s Repsol, and France’s Total from building three separate LNG facilities by 2010.

According to Fereidun Fesharaki, one of the world’s most senior LNG analysts, by 2015 Iran “had planned 5 billion cubic feet a day (bcf/d) from three projects: Iran LNG, Persian LNG (Shell) and Pars LNG and had tentative plans for another 5 bcf/d. Iran lost the projects and now realizes it is too late to get into the LNG game.”

In other words, the five LNG export facilities that are under construction in the US – Cheniere’s Sabine Pass and Corpus Christi, Texas locations, Sempra’s Cameron LNG in Louisiana, Freeport LNG in Texas, and Dominion’s Cove Point, Maryland site – have essentially stolen the march from Iran. If completed, the five LNG facilities would export roughly 10 bcf a day by 2020, almost exactly the amount originally planned by Iran.

Profits Denied?

With the signing of the nuclear deal in July, Iran has decided to move on, and its natural gas industry expects to benefit from increased trade in oil and gas services and technology that are no longer being held up by sanctions.

“They are very aware that they lost the opportunity for exporting gas as LNG,” said Sara Vakhshouri, an Iranian energy analyst with SVB Energy International in Washington. “Iran’s major investment for gas export is by pipeline” to neighboring countries such as Pakistan, Iraq, India, and Oman.

Things seem not nearly as rosy for US shippers like Cheniere, who are entering the market amid a deep price slump. Cheniere in particular is undergoing corporate unrest with its Chief Executive Charif Souki resigning over the weekend in the aftermath of a boardroom coup. Having won on the geopolitical battlefield, will US LNG be able to compete effectively over the long-term, with oil-linked gas contracts hovering around $9 per million Btu in Asia and barely $6MMBtu in an unseasonably warm Europe?

For the most part, the answer is yes, say experts. Cheniere and other plant owners who receive tolls for cooling and loading the gas have little investment risk, while companies such as BG Group, Korea’s KOGAS, and India’s GAIL, who own capacity at Sabine Pass, will be able to supply its long-term contracts with spot market natural gas that is currently selling at around $2 per thousand cubic feet, the lowest levels since 2012.

Grabbing up a major portion of the export market for natural gas in the 21st Century was not part of Washington’s plan when the US began its secondary sanctions regime against the Islamic Republic, but geopolitics operates with a lot of misdirection, opportunity costs and unanticipated leverage points.

Because the political leverage and trade linkages developed via the LNG trade are only likely to deepen, it’s likely the value of being a major LNG supplier will create US advantages in diplomacy and geopolitics in the decades ahead, even if we don’t quite appreciate its ramifications today.