28 December 2018

U.S. Department of Energy issues policy statement eliminating the “end use” reporting provision in authorizations for the export of liquefied natural gas

On December 19, 2018, the U.S. Department of Energy issued a policy statement eliminating from any future export authorization orders the requirement that exporters report where LNG was “received for end use.’’  The relief is a nod to market participants who expressed concerns that exporters often have limited visibility into where their natural gas is ultimately consumed.  The policy now will only require that exporters report where the natural gas was “actually delivered.”  DOE issued an accompanying blanket order, DOE/FE Order No. 4322, to remove the end use provision from existing authorizations.

In 2016, after it granted export applications to two Canadian LNG exporters, Bear Head LNG Corp. and Bear Head LNG (USA) and Pieridae Energy (USA) Ltd., DOE began requiring reporting of the location where the exported natural gas was received for end use.  DOE explains that its concern was that U.S. natural gas could be exported to Canada or Mexico and then to other countries, and then re-exported from there to unauthorized destinations, side-stepping regulation.

DOE now reverts to its pre-2016 policy of requiring reporting only of where natural gas was actually delivered.  DOE states that this change is warranted because “there is currently insufficient concern about authorization holders attempting to circumvent the public interest review process for non-FTA exports to justify an end-use reporting requirement—particularly given the compliance difficulties encountered by authorization holders.”  As further support, DOE states: (1) all U.S. LNG export terminals operating or currently under construction have long-term authorization to export to both FTA and non-FTA countries; (2) presently there is no LNG ‘‘hub’’ located in a FTA country; and (3) re-exports of all LNG cargoes represent a very small percentage of LNG trade (globally traded LNG volumes in 2017 were 293.1 million tons, and only 2.7 million tons were re-exported during the year).

This is related to DOE’s recently issued notice and request for comments related to Form FE-746R, on which LNG exports are reported.  There DOE proposed to change to its confidentiality policy regarding: (1) confidentiality of price information reported regarding LNG exports by vessel, and other forms ohttps://www.energy.gov/sites/prod/files/2018/08/f55/2018-18829.pdf.f transportation; (2) the Specific Purchaser/End User reported on the reports; and (3) reporting of information about the heat content of LNG imports and exports.  In the notice and request for comments, DOE had proposed to keep the Specific Purchaser/End User information confidential.  But the policy statement and accompanying order has surpassed that proposal and eliminated the reporting of that type of information completely.  DOE has not yet issued guidance on its other proposals from its notice and request for comments on Form FE-746R.

We will continue to monitor and keep you apprised of developments related to DOE export authorizations and reporting requirements.  Please let us know if you have specific questions or concerns.