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The news earlier this month that Ukraine signed its first liquefied natural gas contract with an American company would be cause for celebration, but for one detail: the Biden administration’s continued “pause” on LNG export permits (The Wall Street Journal, subscription).
 
What’s going on: The coming expiration of a five-year transit agreement between Russia’s Gazprom and Ukraine “has hastened the imperative for the region to procure alternative supply. That’s why Ukraine’s largest private energy company, DTEK, [in recent weeks] signed a deal with Virginia-based Venture Global … [to] buy LNG from Venture Global’s [Calcasieu Pass, or CP2] facility.”

• As part of the deal, DTEK could also buy up to 2 million tonnes of gas every year (enough to heat approximately 28 million homes for a month) from Venture’s under-construction CP2 site, which “could supply about 5% of the world’s LNG by 2026.”
• The hitch: CP2 “is ensnared in the administration’s moratorium on new LNG export projects, which could continue if Mr. Biden wins reelection.”

The background: In January, the Biden administration announced an indefinite moratorium on the issuing of export permits for U.S. LNG so it could “take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment.”

Why it’s a problem: Since Russia’s 2022 invasion, Ukraine has increasingly come to rely on American LNG to meet its energy needs.

• Europe as a whole accounted for 67% of U.S. exports in the first half of 2023, the NAM told legislators earlier this year.
• And the overwhelming majority of Americans support U.S. LNG exports, a March NAM survey found.

What it means: “If Europeans can’t get gas from the U.S., they will have to turn to Russia. The same goes for other countries.”

Our view: “Robust U.S. LNG exports are critical to our allies’ energy security and the American economy,” said NAM Director of Energy and Resources Policy Michael Davin. “Natural gas is an affordable, plentiful power source and a key component of an all-of-the-above energy policy. We will continue to urge the administration to end the freeze on export permits.”