LNG Developers Caught in a Regulatory Waiting Game
If you think LNG is America’s energy darling, think again. Two major Gulf Coast projects—Venture Global’s CP2 and Commonwealth LNG—are stuck in limbo as the U.S. Department of Energy (DOE) says its hands are tied until the Federal Energy Regulatory Commission (FERC) finishes environmental reviews. This isn’t just bureaucratic red tape; it’s a tug-of-war between energy expansion and environmental scrutiny. FERC recently yanked Venture Global’s construction go-ahead for CP2, demanding another environmental review. Commonwealth LNG is in a similar boat, waiting for FERC’s nod. With no clear timeline, developers are frustrated, environmentalists are elated, and the industry is left holding its breath. The stakes couldn’t be higher. The U.S. is the world’s top LNG exporter, thanks to soaring demand in Europe post-Russian pipeline woes. The US exported nearly 12 billion cubic feet per day last year, outpacing rivals like Qatar and Australia. But delays like this threaten that momentum, and let’s not forget that under Biden, approval times for new LNG projects have stretched from weeks to nearly a year. Adding fuel to the fire, natural gas prices are wobbling. While crude oil prices are holding steady—WTI at $69.01 and Brent at $72.68—natural gas is sliding, down 1.73% to $3.127. That’s not great news for an industry facing rising costs and political hurdles. Venture Global isn’t mincing words, calling the additional FERC review unnecessary. But this is more than a one-off slowdown; it’s emblematic of a broader clash. Coastal communities in Louisiana and Texas are speaking out against pollution, and climate activists are leveraging these grievances to push for fewer hydrocarbon projects altogether. What will likely follow is uncertainty, delays, and more court battles. The Biden administration’s focus on stricter environmental reviews has drawn praise from activists but sparked ire among energy execs. As the industry tries to balance expansion with regulation, LNG’s future is anything but smooth sailing.
National Gasoline Prices Fall Below $3 Per Gallon
The U.S. national average price of gasoline has fallen below $3 per gallon for the first time in more than three and a half years. According to GasBuddy data compiled from more than 12 million individual price reports covering over 150,000 gas stations across the country, the average national gasoline price was $2.97 per gallon on Monday, a level they last touched in 2021. De Haan has noted that some 35 U.S. states now enjoy average gas prices below $3 per gallon, an increase of seven states from a month ago. “The national average has finally fallen below $3 per gallon, and it couldn’t come at a better time for motorists with the holidays upon us. One would need to count over 1,300 days since we’ve seen the national average this low, with the affordability of gasoline at its lowest non-COVID level since 2015,” said Patrick De Haan, head of petroleum analysis at GasBuddy. Oil is the primary factor that determines gasoline prices in the United States, and commodity experts at Standard Chartered have predicted that U.S. oil production will not surge under Trump. According to the experts, U.S. crude production has increased by 4.7 mb/d since the pandemic-era low of May 2020; however, it’s just 0.4 mb/d higher than the pre-pandemic high of November 2019, working out to an annual production growth rate of just 80 thousand barrels per day (kb/d) over this timeframe. Further, the growth clip is forecast to continue to slow down in the current year and in 2025. U.S. liquids supply increased by 1.605 mb/d in 2023, but StanChart has forecast growth of just 630 kb/d in 2024, slowing further to 300 kb/d in 2025. With more than a month since U.S. President-elect Donald Trump won a second term in the Oval Office, oil markets have been struggling to find direction despite event risk remaining high, particularly in the Middle East. According to StanChart, the market’s apparent hesitation to trade a view with any conviction has intensified the notion that oil markets seem content to wait for Trump to take office.
India Will Dominate Oil, Gas Transmission Pipeline Length Additions in Asia
In a release sent to Rigzone recently by the GlobalData team, the company said India will dominate oil and gas transmission pipeline length additions in Asia by 2028. “India is expected to be at the forefront in terms of the trunk/transmission oil and gas pipeline network additions in Asia, accounting for more than 40 percent of the region’s total pipeline length additions by 2028,” the global data and analytics company stated in the release. GlobalData’s release highlighted that an outlook report by the company on oil and gas pipelines revealed that India “is likely to witness the start of operation of more than 50 planned and announced pipelines by 2028, adding a total transmission pipeline length of over 26,000km”. Of this figure, around 24,000km would be from planned pipelines that have received necessary approvals for development, GlobalData pointed out in the release. Bhargavi Gandham, an oil and gas analyst at GlobalData, noted in the release that “natural gas and product pipelines account for more than 80 percent of the upcoming transmission pipeline length additions in India by 2028”. Gandham added that the upcoming Kandla–Gorakhpur product pipeline is likely to be the longest among all the upcoming pipelines with a length of 2,809km. “The other significant addition to the country’s pipeline network is the planned Mehsana–Bhatinda natural gas pipeline,” Gandham said, noting that the pipeline will run a length of 1,834km. “With a length of 1,755km, Mumbai–Nagpur–Jharsuguda, a natural gas pipeline, is the next significant contributor to pipeline additions,” Gandham went on to state. In a separate release sent to Rigzone by GlobalData in May, the company said India is poised to take the lead in the number of liquid storage projects in Asia that are expected to start operations during 2024-2028, “contributing about 42 percent of the region’s total project count by 2028”.
PNGRB pushes for natural gas as a cleaner, greener energy solution for India
As the world’s fastest-growing emerging economy aims to transform into a manufacturing behemoth while adopting clean energy sources, natural gas plays a critical role as the best transition fuel, asserts the Petroleum and Natural Gas Regulatory Board (PNGRB). “India’s approach is aligned with global efforts to combat climate change through cleaner energy transitions. Various studies worldwide underscore the benefits of natural gas in reducing carbon and particulate matter emissions,” emphasises A Ramana Kumar, Member, PNGRB. The shift to piped natural gas (PNG), compressed natural gas (CNG) and liquefied natural gas (LNG) has been successful in several countries, leading to improved urban air quality. India’s initiatives serve as a model for similar economies looking to balance energy needs with environmental protection, he told businessline. PNGRB’s work on infrastructure creation and regulatory measures accelerates the shift towards natural gas. It also facilitates India’s goal of achieving a 15 per cent share of natural gas in its energy mix by 2030. Developing and expanding city gas distribution (CGD) networks is a critical intervention by the downstream regulator to curb air pollution, particularly in densely populated urban clusters. The supply chain transporting LPG cylinders to households adds to vehicular pollution and traffic congestion, which is negligible for PNG. Around 5,42,960 Inch-km of pipelines have been laid to enhance natural gas delivery to homes, transport, commercial and industrial sectors. PNGRB’s efforts to expand CGD networks and promote PNG are showing results. India now has around 13.6 million domestic PNG connections, which is expected to increase to 126.3 million by 2032. Promoting CNG in cities has helped reduce air pollution by encouraging the transport sector to switch to cleaner fuels. As of September 2024, around 7,000 CNG stations had been established nationwide, and the number is expected to reach 25,000 by 2032. The National Clean Air Programme (NCAP) of the Ministry of Environment, Forest and Climate Change has identified 131 cities as Non-attainment cities (NAC). NCAP aims to reduce PM10 concentrations by 20-30 per cent in these cities by FY25, with an extended target of up to 40 per cent by FY26, underscoring the need for cleaner fuels. Here, PNGRB is working in close coordination with the Environment Ministry to share available and upcoming Natural Gas infrastructure in these cities and devise various incentives for industries to convert to natural gas from polluting fuels.
Saudi Arabia Cuts Oil Prices
Saudi Arabia is cutting oil prices for buyers in Asia by more than expected after OPEC+ further delayed an output revival, underscoring how the outlook for the market remains weak. State oil producer Saudi Aramco will sell its main Arab Light crude grade at a premium of 90 cents a barrel to the regional benchmark in Jan, according to a price list seen by Bloomberg. That compares with $1.7 for this month. Earlier, OPEC+ – led by Saudi Arabia and Russia – agreed to push back production increases planned for the start of January by another three months, following two previous delays. The prospect of an impending oversupply leaves the group with the uncomfortable dilemma of whether to prolong production curbs well into 2025 or risk a price slump.
GAIL plans 47 km pilot project for natural gas transmission
Gas Authority of India Ltd (GAIL), a state-run natural gas transmission company, has decided to launch a pilot project covering 47 km in Siliguri. Today, GAIL officials met mayor Goutam Deb and other representatives, including the commissioner of the Siliguri Municipal Corporation, to seek permission for laying micro-pipelines for the distribution of natural gas for both commercial and domestic purposes. Mayor Goutam Deb has given in-principle approval to the project, enabling Siliguri residents to benefit from the initiative. Speaking to reporters, Mr Deb stated that the state government and the Public Works Department (PWD) had prepared a standard operating procedure (SOP) for implementing the natural gas transmission system for GAIL in Kolkata. He added, “We will follow the same SOP to implement the pilot project here.
The Future of U.S. LNG: Growth, Delays, and Uncertainty
The U.S. is currently the world’s largest LNG exporter, but future growth is threatened by legal challenges, project delays, and a pause on new export permits. The outcome of the 2024 U.S. presidential election could significantly impact the future of U.S. LNG policy and export potential. Industry leaders are calling for an end to the permitting pause and streamlined regulations to support continued growth in the U.S. LNG sector. The U.S. LNG export industry has recently hit several stumbling blocks. And who will be America’s president in the next four years may not even be the biggest. Litigation at court from environmental groups, a contractor bankruptcy, and President Joe Biden’s permit pause have combined to increase uncertainty for U.S. LNG project developers and exporters this decade. Top LNG Exporter The expansion of the LNG export infrastructure over the past five years and the flexibility in cargo destination of U.S. LNG have made America the world’s biggest exporter of liquefied natural gas. Soaring sales in Europe, which has scrambled to replace Russian pipeline gas, and more LNG projects coming online this decade boosted U.S. exports by 12% in 2023 from a year earlier. At 11.9 billion cubic feet per day (Bcf/d) of LNG exports, the United States easily beat its closest rivals – Qatar and Australia – to become the biggest LNG exporter last year, EIA data showed. Utilization of U.S. LNG export capacity averaged 104% of nominal capacity and 86% of peak capacity across the seven U.S. LNG terminals operating in 2023 as relatively strong demand for LNG in Europe amid high international natural gas prices supported increased U.S. LNG exports last year. This year, U.S. LNG exports are set to average 12.1 billion Bcf/d, slightly up from 2023, and 13.8 Bcf/d in 2025, per the EIA’s latest Short-Term Energy Outlook for October. Two new projects, Corpus Christi LNG Stage 3 and Plaquemines LNG, are in the commissioning phase to start LNG export operations, and each of these facilities will begin exporting LNG by the end of 2024, the EIA said.
Gas Prices Set for a Breakout in 2025
Natural gas prices are on the climb and this climb is about to intensify in the first months of the new year as seasonal demand hits its peak in the northern hemisphere. That’s bad news for struggling economies. Gas prices in Europe, Asia, and North America have made solid gains this year. Reuters’ Gavin Maguire reported this week those fall in the range between 30% and 50%–and that’s not the end of the rally. Winter is just beginning, and the weather in Europe and Asia, as well as most of North America, is about to get a lot colder. Energy market analyst John Kemp reported that speculators in the United States were covering their short bets on natural gas at the fastest rate in over a year, reinforcing expectations of stronger gas prices. What’s more, these bets are being made just when the Energy Information Administration reported that the U.S. is entering winter with abundant natural gas reserves: the highest level since 2016, in fact. Yet even this fact, with gas in storage at over 3.9 trillion cu ft, has not been enough to maintain speculators’ bearish mood. In addition to the seasonal rebound and demand—and the expectation that it will be one major rebound after two warm winters—one driver behind this change in sentiment is the outlook for production. The focus here is on the United States and the fact that gas producers have been curbing production because of the chronically depressed prices. Now that prices are improving, it will be a while before the industry responds with a production boost—and until then, prices will be trending higher. So will power generation costs for most of the key markets. Europe will continue to be a major driver of natural gas demand in the coming months. Winter is not the top performance season for wind and solar, as recently evidenced by the energy mix of Germany, which featured coal as its biggest generator, followed by natural gas, and wind a close second to gas. Yet the gas that Europe is using to generate power is the same gas that much of Asia has come to rely on for its winter needs: U.S. liquefied natural gas. This means we have another tight race for limited LNG supply this winter. China provided some easing of that tightness this week when it completed the final connection of Russia’s Power of Siberia gas pipeline to end consumers, which would allow the pipe to reach its full capacity next year, covering 9% of the country’s gas demand. That’s 38 billion cu m that China won’t be looking to buy on the LNG spot market, and this is good news for other Asian countries—if they can outbid the Europeans. This will be tough, and the Europeans will most likely get more gas than Asian nations this winter, as they did back in 2022. This means two things: that Asian nations will fall back on coal once again and that Europeans’ electricity bills will rise once again, as will the price of everything that features electricity in its input costs. It is a tricky time for yet more consumer price inflation in Europe as people’s disgruntlement with the cost of living intensifies, but there is no chance of avoiding that disgruntlement. Europe doesn’t have a lot of options when it comes to gas supply. And U.S. producers are yet to start ramping up output as prices reverse their decline. This is perhaps the toughest stage in the energy commodity cycle for consumers. Supply is tightening because of a past surplus that drove prices down, prompting the production curbs. At the same time, as fate and the Earth’s rotation around the Sun would have it, demand is on the way to its annual peak, aggravating the imbalance with supply and set to cause some serious pain for consumers. The data on gas withdrawals and injection into storage in Europe is enough to paint a picture that U.S. gas producers would enjoy, unlike European governments and other large buyers. In Germany, withdrawals on Tuesday stood at 942 GWh, while injections totaled 16.22 GWh. For France, the withdrawal figure was 930.7 GWh, while the injection figure stood at 96.50 GWh. Italy and the Netherlands also saw massive withdrawals compared to the injection of new gas into storage. The situation points to looming depletion unless winter temperatures let go smack in the middle of the season to give Europe a breather. Yet the weather is notoriously unreliable when it comes to survival—and to energy security as the countries at the forefront of the energy transition are discovering for yet another winter. The looming gas shortage might give decision-makers in those countries pause for reconsideration of priorities, with energy security coming on top of emission levels. On the other hand, this has happened before, and it has not led to changes in priorities, so the chances of things changing now are slim.
Pakistan defers LNG contract with Qatar for a year, petroleum minister says
Pakistan has deferred an agreement to buy liquefied natural gas from Qatar for a year, Petroleum Minister Musadik Malik said on Wednesday, and will now receive the contracted LNG cargoes in 2026 instead of 2025. “We currently have a surplus of LNG, so we are not importing any new cargo,” said Malik. There were no financial penalties for deferring, rather than cancelling, the order, he added. Annual power use in Pakistan, which gets over a third of its electricity from natural gas, has fallen 8-10% year-on-year over the past three quarters, its power minister told Reuters in November, primarily due to higher tariffs curbing household consumption. The South Asian nation has deferred five LNG cargoes from Qatar and is negotiating to defer five more with other markets, Malik told journalists, without disclosing the names of the sellers. The government said in November it was slashing its electricity tariffs over the winter to boost consumption and cut the use of natural gas for heating. Many power utilities in Pakistan have had to curtail or even halt operations in winter months due to demand dropping by up to 60% from peak summer levels. Malik told Reuters in June that Pakistan was unlikely to buy LNG cargoes on the spot market until at least the beginning of winter in November due to oversupply and high prices. Pakistan, which last bought a spot LNG cargo in late 2023, cancelled its spot LNG tender for delivery in January owing to oversupply and a lack of buyers in Pakistan at spot prices. Malik also denied local media reports that Pakistan was closing a deal to import one cargo of crude oil from Russia each month from January. He said his government had restarted talks with Russia and was looking to solve obstacles such as “insurance, reinsurance, deal structure, shipping lines and ship cargo size”, but had not concluded a deal. The previous caretaker government had decided not to pursue a government-to-government agreement with Russia, allowing the private sector to step in, Malik said. Pakistan signed a deal with Russia in 2023 to import crude oil for local refining, which included a 100,000 metric ton shipment to state-owned Pakistan Refinery Limited. Under that arrangement, Pakistan paid for the crude at a discounted rate using Chinese yIan
Why Gas Markets Aren’t Scared of Mideast Conflict Right Now
U.S. natural gas futures dropped to $3.08/MMBtu on Tuesday, their lowest in over a week, after surging 20% in November. Gas prices have declined amid forecasts of milder weather in mid-December, following a brief cold spell that had driven earlier gains. Utilities have stopped drawing heavily from storage, despite colder-than-usual weather recently boosting consumption. Meanwhile, U.S. gas production clocked in at a robust 101.5 billion cubic feet per day in November, but below last year’s peak of 105.3 bcfd. In contrast, European natural gas futures climbed to €48.7 per megawatt-hour, close to their one-year high, as colder weather is forecast to spread across the continent, increasing heating demand. Temperatures in western Europe are set to drop, adding pressure to fast-depleting gas reserves, with gas stores only 85% full compared to 95% a year ago. Further, there are growing concerns over supply risks, including the upcoming expiration of a key gas transit deal between Russia and Ukraine. The Middle East conflict has so far not significantly impacted global oil and gas flows, reflecting the marginality of Eastern Mediterranean gas on world markets, even as more cracks appear in the ongoing ceasefire between Israel and Hezbollah. On Monday, Hezbollah fired into a disputed border zone held by Israel, with Lebanon’s parliament speaker claiming that Israel has committed 54 breaches of the ceasefire. However, Israel’s energy sector is bound to benefit from the ceasefire by encouraging foreign contractors to return to the country’s offshore and resume key gas expansion projects. U.S. major Chevron Corp. (NYSE:CVX), operator of both Israel’s key gas fields, 23 tcf Leviathan and 14tcf Tamar, put expansion projects at both on hold due to the conflict. The expansion of both gas fields had originally been due for completion by mid-2025. The expansion will increase Israel’s gas exports to Egypt by a reported 6bn cubic feet per year. Back in February, Chevron approved a US$24 million investment to boost gas production at the Israeli?Tamar offshore gas field. Israel–one of the main gas exporters in the region–temporarily suspended some exports in the immediate aftermath of the war but managed to return to normal production quickly. The biggest disruption to Israel’s energy sector has been the suspension of the British Petroleum (NYSE:BP)–Abu Dhabi National Oil Company (BP-Adnoc) bid to acquire a 50% stake in Israeli gas producer?NewMed Energy (OTCPK:DKDRF) for US$2bn. NewMed Energy is the majority shareholder and main operator of the giant Leviathan Natural Gas Field with a 45.3% working interest, while Chevron Corp and Ratio Oil Corp. have a 39.7% and 15% stake, respectively. The deal was first thrown into question after an independent panel appointed by NewMed recommended raising the asking price by 10%-12%, or as much as ~$250M, which might seem like a stretch considering back then the company had a market cap of $2.9B and $87 million in cash but $1.73B in debt. Meanwhile, reports emerged that executives at BP and Adnoc were anticipating further delays on the deal until the political situation improves. Experts are worried that a surge in civilian casualties could make it politically untenable for the companies to proceed, with the death toll in Gaza already approaching 50,000, mostly civilians. NewMed and its two partners discovered the Leviathan Natural Gas Field in the Levant Basin Province in 2010. The gas field straddles the sea borders of Israel, Lebanon, Palestine, the Republic of Cyprus and the Turkish Republic of Northern Cyprus. With 22.9 trillion cubic feet of recoverable gas, Leviathan is the largest natural gas reservoir in the Mediterranean and one of the largest producing assets in the region. Lebanon’s Gas Quest Could Go Bust But the NewMed takeover is not the only energy project that has been disrupted by the Israel-Hamas war. Last year, French energy group TotalEnergies (NYSE:TTE) set the first drilling rig at its location in the Mediterranean Sea off Lebanon’s coast near Israel’s border with the country looking to commence operations in search for gas. The cash-strapped nation hoped that future gas sales could help the country pull out of its deep financial crisis that has seen the local currency lose more than 98% of its value. “The arrival of the equipment marks an important step in the preparation of the drilling of the exploration well in Block 9, which will begin towards the end of August 2023,” TotalEnergies said in a statement. TotalEnergies leads a consortium of energy companies working on the offshore project, which includes Italian oil and gas giant Eni S.p.A. (NYSE:E) as well as state-owned QatarEnergy. The drilling operations came after a landmark U.S.-brokered agreement that saw Lebanon and Israel establish a maritime border for the first time ever. Previously, Lebanon’s Energy Minister Walid Fayad said they hoped to determine whether the exploratory block has recoverable gas reserves by the end of the current year. Unfortunately, the ongoing war is very likely to make cooperation between the two countries almost impossible, with Lebanon being home to Israel’s arch-enemy, Hezbollah.