Energy: LNG Limited gets the all-clear to expand US exports
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LNG Limited (ASX: LNG) has received regulatory approval to boost exports from its US processing facility.
For countries that the US has a free-trade agreement with, LNG’s export quota will rise to 8.8 million tonnes per annum — a 10 per cent increase on the current level of 8 million tonnes.
It’s the first approval from the US Department of Energy (DoE) in five years, after a previous ruling in March 2014 allowed LNG Ltd to increase exports to 8mtpa from 4mtpa. (LNG can still export to countries with a free-trade agreement, after getting separate approval in 2016.)
Stockhead has asked LNG to comment on which countries in particular it hopes to target in the wake of the latest export increase.
LNG’s main project in the US is the construction of a gas processing facility in Louisiana, via its fully owned US subsidiary Magnolia LNG, LLC.
Magnolia’s current proposition is to build four liquefaction production trains, each with a capacity of at least 2.2mtpa.
“Final investment decision and initiation of construction is expected upon execution of sufficient offtake agreements to support financing,” the company said.
LNG CEO Greg Vesey said the DoE approval gives the company greater flexibility and increased potential to sign sales agreements.
“Our discussions with off-takers are at an advanced stage, and we know they will see this action by the DoE as a positive development for Magnolia,” Vesey said.
Last November, the company received a second-strike on executive remuneration as shareholders raised concerns about Vesey’s $US635,000 salary.
Shares in LNG were up four per cent in morning trade at 48.5 cents, down from a 12-month high of 88 cents reached in August last year.
On energy markets, prices for brent crude oil ended the week flat at $US67 a barrel, and have dipped by 0.75 per cent in Monday trade.
Analysts at RBC Capital Markets also highlighted that OPEC chose to forego its April meeting last week, thereby confirming that the current production cuts in place — of 1.2m barrels per day — will be extended to June.
“Spot LNG prices continued to trend lower, with Asian benchmarks for May delivery reaching as low as US$4.65/mmBtu (one million British Thermal Units) this week,” RBC said.