Three independent, but not wholly unrelated, events occurred over the last few weeks, each arising out of the Natural Gas Act’s application and the growing importance of LNG exports to the United States and the international community.
(1) Following the crisis in Ukraine, there were continuing calls from a variety of politicians and pundits to increase LNG exports to Europe and decrease Europe’s reliance on Russian exports of natural gas. In particular, a congressional sub-committee considered and advanced H.R. 6 (The Domestic Prosperity and Global Freedom Act). This measure would expedite the application process for contracts with supplies destined for any member nation of the WTO (currently, an expedited process only applies to contracts with supplies destined for countries with which the United States has a free-trade agreement).
(2) Cheniere Energy and Endesa, a Spanish utility company, signed two 20-year LNG sale and purchase agreements (“SPAs”) for 2.25 million tonnes per annum (“mtpa”) commencing upon completion of the Corpus Christi Liquefaction Project. Cheniere Energy has also entered into agreements with counter-parties from the Asian markets, including South Korea and Indonesia. Notably, each of these agreements is at least partially indexed to Henry Hub.
(3) The Department of Energy (“DoE”) conditionally approved an LNG export application for the Jordan Cove Energy Project in Coos Bay, Oregon. This is the seventh permit conditionally granted by the DoE (over 20 remain in progress). The approval is conditioned on future approval by the Federal Energy Regulatory Commission. DoE reviews applications to ensure that sales resulting to countries that do not have free-trade agreements are in the “public interest” (in accordance with the standard set out in section 3(a) of the Natural Gas Act). Significantly, the DoE continues to highlight the importance of supply security to allies of the United States as one of the considerations in making its decision, stating at page 142: