U.S. LNG Exports to India Present Significant Geopolitical Benefits

Louisiana Representative Charles Boustany has a lot of reasons to support the export of liquefied natural gas (LNG) from the United States.  His district covers the majority of the shoreline from Louisiana’s border with Texas to the east and south of New Orleans, including Lake Charles, the site of the Cameron LNG terminal.

Yet, unlike Sabine Pass and Freeport LNG, Cameron still does not have approval from the Federal Government to export LNG to non-FTA countries.  However, Cameron LNG is not alone. Upwards of 20 other permit applications are still under review in a process which could take up to two years to get through.

Should this multi-billion dollar project get the green light, thousands of new jobs will be created not only in Congressman Boustany’s district, but also throughout the country by way of increased exploration and production operations, steel production, and hundreds of other areas.

These benefits don’t end here though, they extend all the way to places like India, which is increasingly reliant upon imported energy sources.  In fact, according to a study by Ambassador Karl Inderfurth and Persis Khambatta from the Center for Strategic and International Studies (CSIS) in Washington, DC, 75 percent of India’s current energy is imported.  By 2023, that number is expected to rise to 90 percent.

At a CSIS presentation this week, Representative Boustany remarked that the “U.S. – India trade relationship is underperforming” and that the export of LNG from the U.S. “opens up new opportunities” while helping India meet their increasing energy needs. It would further serve to break down some of the U.S. – India trade barriers and take advantage of a time-sensitive opportunity that is open exclusively to the United States.  “Starting this process is critical,” he adds.

New LNG projects are currently ongoing around the world.  In fact trillions of cubic feet of gas have been discovered in recent years in places like Mozambique and the eastern Mediterranean,  but all of these locations are still years away from exporting significant gas resources.

One exception is offshore Western Australia, where the Gorgon project is still on schedule for first LNG production at the end of 2014.

It’s a different scenario in the United States however.

In the 2000s, LNG import facilities were built on the assumption that the U.S. was going to be a net importer of natural gas, but in the past few years, the situation has completely changed as enormous domestic, onshore natural gas resources have been discovered.  These import facilities, which are already hooked up to the existing gas pipeline grid and have deepwater ports developed, are now looking to change the direction of the gas flow outwards, to places like Japan, India, China, Argentina, Brazil, and other places.

“We are also the only country in the world that is seeing a de-linkage of gas prices to the price of oil.  Canada isn’t even enjoying that type of advantage,” adds Boustany.

An Environmental Issue

Some opponents to natural gas exports point their finger at the controversy surrounding fracking, a required process in developing natural gas fields.  Yet, considering we are all stewards of the planet, the reality is that India, to meet its energy needs, is now burning low quality coal resulting in enormous air pollution issues.  The same issue is happening in China and many other countries. Even potential negatives of fracking may be outweighed by the positives of providing cleaner energy.

The debate over fracking continues, however it’s painfully clear what happens to the atmosphere when coal is used as a primary power source.

The Geopolitical Benefits of U.S. – India are Significant

In his study, Ambassador Inderfurth notes:

“The geopolitical role that India increasingly plays as a provider of security in the Indo-Pacific region converges with the United States’ interest to help ensure energy security in Asia.  Access to affordable and dependable energy resources to sustain growth and maintain domestic stability is a primary concern for many countries.  By providing much-needed energy exports to India and other partners in the region, the United States can help meet their demand and ease anxieties about securing future supplies.”

Representative Boustany and many of his colleagues on Capitol Hill, such as Representative Lankford, openly support the export of LNG from the U.S. and acknowledge the reality that at the end of the day, once all the permits are considered, the markets will decide which projects will come to fruition and how much gas can be exported.  There appears no doubt however, that the benefits of U.S. gas exports extend on a global economic and political scale.