- Sector remains concerned over the deadline for US ships.
- USTR sticks with the schedule for phase-in.
The US Trade Representative has scrapped a proposal to suspend LNG export licenses if operators fail to meet requirements for transporting a share of exports on US ships, reports Platts.
But US LNG producers remain concerned that requirements for US exporters to ship LNG on US-built ships are unworkable, potentially creating a hurdle higher than the year-long suspension of federal LNG export reviews in 2024 under the Biden administration, according to the LNG industry’s leading trade group, the Center for Liquefied Natural Gas.
“This is more problematic than the pause,” Charlie Riedl, executive director of the center, told attendees of the LDC Gas Forums’ Gulf Coast Energy Forum in New Orleans Oct. 13.
USTR Cuts Sanctions on LNG Cargoes
The USTR announced Oct. 10 changes to the maritime restrictions first announced in March, targeting China’s maritime influence and seeking to promote US shipbuilding.
Among the new tweaks, the USTR stripped out the most punitive aspect for LNG exporters —a provision that indicated the penalty for noncompliance could be suspension of the export license.
“This modification will avoid potential short-term disruptions to the LNG sector while promoting investments in US shipbuilding capacity and production of LNG [ships],” the USTR notice said.
The new version maintains the scheduled phase-in, proposed in June, without specifying the enforcement mechanism.
US-flagged and operated ships would still need to ship 1% of LNG exports starting in 2028. After that, the requirement for shipments to be on US-built, flagged, and operated ships would start at 1% in 2029, based on total exports for the prior calendar year. Then, the requirement ratchets up over time, climbing to 2% in April 2031 and continuing to rise as high as 15% in April 2047.
The LNG trade group has warned that it would be impossible for the industry to comply because no such ships that currently exist could meet the requirement, and the US also lacks shipyards that could build them before the mandate kicks in.
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Source: Platts
