US President Barack Obama's administration is under pressure, both at home and abroad, to either approve or sharply and definitively restrict plans to export a significant chunk of domestic natural gas as LNG. But the uncertainty underlying such pressure may be exaggerated. In fact, gas producers and LNG terminal owners are likely to gain eventual approval for substantial exports, if not from the current Obama team at the US Department of Energy (DOE), then through litigation or a future administration.
One lingering question is whether the DOE might approve exports to countries with which the US has free trade agreements (FTAs) because of the legal difficulty of doing otherwise, while withholding approval for sales to other countries. But even if US LNG couldn't go directly to "non-FTA" countries, some locations that have free trade pacts with Washington -- including Canada, Mexico, South Korea and Singapore -- might be able to serve as reshipment hubs. With Singapore striving to become a major trading hub this is a real possibility, says Bentek Energy analyst Chris Micsak, although this would cause US suppliers to miss out on arbitrage opportunities.
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