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Strategic Decisions in the Liquefied Natural Gas Market

The cessation of expansion plans for liquefied natural gas (LNG) terminals has raised concerns among European buyers. The announcement by the Joe Biden administration has caused uncertainty in the market, as the European Union heavily relies on US fossil fuel production.

In an interview with EL PAÍS, Mike Considine, Deputy Secretary of the US Department of Energy, stated that the current LNG facilities’ capacity is more than sufficient. Extensive calculations were conducted to ensure that there would be no disruptions in supply. Despite initial fears, Considine pointed out that the cessation of expansion plans only affects a very small number of terminals, and the current liquefaction capacity exceeds export needs, particularly to Europe.

The decision by the Biden administration is based on economic analysis rather than environmental considerations. After a decade of unprecedented growth in LNG demand, it is expected that the growth will slow down in the coming years, especially in mature markets. Therefore, investing in costly infrastructures without certainty of returns would not be a sensible decision.

Despite this cessation, the United States remains one of the major exporters of LNG, along with Qatar and Norway. However, a significant portion of its production is obtained through hydraulic fracturing, a controversial technique due to its environmental impact. The Biden administration has also promoted the Inflation Reduction Act, which aims to reduce greenhouse gas emissions and strengthen economic growth.

Regarding national security, the US Department of Energy assures that foreign investments in the energy sector align with the country’s security priorities. All direct foreign investments are analyzed from the perspective of integrity, especially in a complicated geopolitical context with the Russian invasion of Ukraine and competition from China.

In summary, the cessation of expansion plans for LNG terminals has raised concerns among European buyers. However, the US Department of Energy ensures that the current capacity is sufficient, and strategic decisions based on economic analysis were made. The United States remains an important exporter of LNG, although its production is obtained through hydraulic fracturing. The country also seeks to balance foreign investments in the energy sector with national security priorities.

FAQ:

1. What is the reason for the cessation of expansion plans for LNG terminals?
The cessation of expansion plans is due to economic analysis indicating that the growth in LNG demand will slow down in the coming years, making it impractical to invest in costly infrastructures without certainty of returns.

2. How does this decision affect European buyers?
The decision has raised concerns among European buyers, as the European Union heavily relies on US LNG production. However, the US Department of Energy assures that the current liquefaction capacity is more than adequate to ensure supply, especially to Europe.

3. Which countries are the major exporters of LNG?
The major exporters of LNG are the United States, Qatar, and Norway.

4. How is LNG production obtained in the United States?
A significant portion of LNG production in the United States is obtained through hydraulic fracturing, a controversial technique due to its environmental impact.

5. What security priorities does the United States have regarding foreign investments in the energy sector?
The US Department of Energy assures that all direct foreign investments are analyzed from the perspective of integrity, especially in a complicated geopolitical context with the Russian invasion of Ukraine and competition from China.

Definitions:
– Liquefied Natural Gas (LNG): Natural gas that has been converted into liquid form through a process of cooling at very low temperatures. This facilitates its transportation and storage.

Related Links:
– eldiario.es/economia
– elmundo.es
– rtve.es/noticias