Global Rice News

The White House’s decision to halt new LNG export permits has created uncertainty in the sector, potentially affecting projects that require approvals or extensions to existing permits. Despite this regulatory risk, US-based New Fortress Energy’s Altamira LNG project off the coast of Altamira, Tamaulipas state, Mexico is expected to continue progressing as it is already under construction. However, the permitting freeze may impact the destinations to which the facility can export its LNG. S&P Global Commodity Insights analysts believe that the project will still proceed but delivery locations could change.

The Biden administration’s decision to temporarily halt authorizations issued by the US Department of Energy (DOE) affects projects exporting LNG to countries without free trade agreements (FTA) with the US. The Altamira LNG project, which has a value of over $1 billion, requires non-FTA approval as it relies on US feedgas. Securing DOE approvals is vital for projects seeking financing and eventual construction, particularly as non-FTA countries make up the majority of the global LNG import market.

However, New Fortress Energy already possesses a permit to export LNG to FTA countries, including Nicaragua, where they are developing an LNG-to-power project. Despite lacking non-FTA export approval, New Fortress is likely to deliver LNG produced by the Altamira project to a limited number of Caribbean buyers who have existing free trade agreements with the US, and are currently supplied by New Fortress.

As of November 2023, New Fortress has introduced gas to the Altamira project and anticipates exporting its first LNG cargo by the end of 2023. However, as of January 29, the floating export vessel does not yet contain significant volumes of LNG. The company has received a favorable ruling from the US Customs and Border Protection, allowing them to sell and deliver LNG produced at Altamira to US locations, including Puerto Rico. This ruling is significant, as it confirms that the transportation of LNG to US ports from the Altamira project does not violate the century-old Jones Act, which restricts imports of US LNG at US ports to vessels that meet specific criteria.

New Fortress opted for a unique development approach, starting construction while engineering and design work were still ongoing. Altamira is the first of New Fortress’ Fast LNG units, designed to address the global demand for LNG with shorter timelines and lower costs compared to onshore LNG export projects. If all three trains proposed at Altamira are completed, the project’s capacity would still be less than half that of a typical new terminal in North America.

The pause in LNG export permits by the White House jeopardizes approximately 153.7 million mt/year of proposed nameplate export capacity that is currently being marketed in the US and Mexico, according to S&P Global analysts. Prior to the moratorium, S&P Global projected 23.7 million mt/year of final investment decisions in 2024, including 5 million mt/year in Mexico that relies on US feedgas and would require DOE approval. These decisions and developments will, at the earliest, be delayed until 2025.

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