Access to Gas Markets: A Comparative Study on Access to LNG Terminals in the European Union and the United States

By Talus, Kim | Houston Journal of International Law, Spring 2009 | Go to article overview

Access to Gas Markets: A Comparative Study on Access to LNG Terminals in the European Union and the United States


Talus, Kim, Houston Journal of International Law


  I. INTRODUCTION
 II. DEMAND FOR NATURAL GAS IN THE EU AND THE
     UNITED STATES
III. GLOBAL LNG MARKETS
     A. Access to US LNG Terminals
        1. U.S. Natural Gas Markets--An Overview
        2. Import Facilities for LNG
        3. LNG Terminals--Licenses and Permits
     B. Access to EU natural gas markets
        1. EU Natural Gas Markets--An Overview
        2. EC-level and national-level regulation of
           markets
        3. Access to existing LNG terminals in the
           European Union
 IV. NEW LNG TERMINALS
  V. EU AND U.S. ACCESS REGIMES--A COMPARISON
VI. CONCLUSION

I. INTRODUCTION

World energy markets are going through a profound change. Many countries have moved from a state driven system to a market based system, the prime example being the European Union (EU), where the objective is to create liberalized pan-European energy markets encompassing twenty-seven previously separated and largely monopolized member state markets. (1) This direction, "from-state-to-market," is contrasted with another trend: resource nationalism. (2) Led by many significant petro-states such as Russia and Venezuela, resource nationalism is currently at its heights. (3)

Energy markets have become more international, which has resulted in increased international energy trade and inter-linkages in energy networks. (4) The general trend in the member countries of the International Energy Agency (IEA) is that they become increasingly dependent on the inter-regional gas trade. (5) This is particularly true in Europe, where the indigenous production is rapidly decreasing and dependency on external natural gas suppliers is increasing. (6) The situation in the United States is not as bad, but dependency on external producers is increasing. (7)

Environmental concerns have finally been recognized and now form an integral part of national energy policy objectives. (8) This means increasing reliance on natural gas as the "environmentally friendly" fossil fuel. (9) Coupled with high energy prices and rapidly rising demand for energy, all this has raised concerns over security of supply. Questions that are surfacing include how to manage the international competition over recourses, how to attract the urgently needed investments, and, at the very heart of the discussion, how to maintain the western lifestyle?

This Article focuses on the international competition for liquefied natural gas (LNG). More specifically, it examines the access conditions to LNG re-gasification terminals in the European Union and the United States. After an overview of the current trends in natural gas consumption and LNG trade, the access regime of both the United States and the European Union will be examined. This Article will conclude that the increasingly real competition over LNG and associated investments have had a profound effect on the regulation of LNG terminals in the European Union and the United States. While there are certain differences at the ideological level, the United States being more openly in favor of proprietary use of LNG facilities, (10) the realities of global natural gas markets have aligned practices on both sides of the Atlantic.

II. DEMAND FOR NATURAL GAS IN THE EU AND THE UNITED STATES

Global demand for natural gas is growing much more quickly than the supply. (11) Illustrating this phenomenon, European and North American import levels are rising much faster than export levels. (12)

Imports:

Region        Imports (million cubic
              meters)                  2002      2006

              1990
OECD Europe   178347                   329719    415057
OECD North-   44489                    127510    139004
America
OECD Total    276663                   1557535   676957
World Total   534503                   711879    868095

Data extracted from IEA, Natural Gas Information 2007. (13)

Exports levels:

Exports levels:
Region            Exports : (million cubic
                  meters)                    2002     2006

                  1990
OECD Europe       64096                      142500   171544
OECD North-       43113                      122391   122971
America
OECD Total        110000                     274725   310384
World Total       534312                     714866   884047

Data extracted from IEA, Natural Gas Information 2007. …

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