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LNG imports from USA – Implications for India

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LNG imports from USA – Implications for India

Introduction

With shale gas production increasing, the USA is slated to become a major exporter of LNG. LNG Liquefaction Projects (approximately 140 MMTPA) have been approved and are in various stages of construction. The USA is expected to be one of the top three exporters along with Australia and Qatar once this capacity comes on stream.

Countries like India were looking at importing low-cost LNG. Henry Hub pricing offered a significant advantage over crude oil-linked pricing, making US LNG an attractive and secure source of natural gas to decrease emissions and diversify the energy mix.

Asian companies became the largest buyers of US LNG due to its price advantage compared to crude oil-linked LNG contracts. However, with the decline in crude oil prices from 2015 onwards, US LNG gradually became less competitive in global markets.

This paper examines the growth of US LNG exports, the applicable regulatory requirements, lessons learned from the sudden fall in crude oil prices, and suggests the way forward for sourcing LNG from the United States.

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