Dow Chemical welcomes new DOE rules on LNG exports

Chemical plant
Source: DollarPhotoClub

The top U.S. chemicals maker, Dow Chemical, has praised the U.S. Department of Energy’s announcement that it will cease to issue conditional approvals for proposed LNG export terminals. Under new regulations, companies would have to carry out environmental reviews required by the National Environmental Policy Act before applying for the DOE permit.

Dow believes that these modifications will protect against a rush toward LNG exports and spikes in the currently low price of feedstocks that allow U.S. companies to be competitive in the global market.

Because of the shale gas boom, U.S. chemical manufacturers pay much less for feedstocks and energy than their European counterparts. In manufacturing giants like Germany, companies like BASF and Lanxess pay some of the highest power prices in the world thanks in large part to the country’s decision to phase out nuclear power and push into green energy.

In an interview for the German business daily Handelsblatt, Dow Chemical’s Chief Executive Andrew Liveris said that Europe’s chemical manufacturers will suffer a competitive disadvantage in comparison to the U.S. A recent study has shown that American manufacturing costs are already on par with those in Eastern Europe and close to those of China.

“Europe either must obtain cheap gas or pull out of certain markets and businesses,” Andrew Liveris told the newspaper.

Companies worldwide are joining forces with their American counterparts and investing in the U.S. to take advantage of the country’s new abundance of energy. Last month, German chemical giant BASF has announced that it is considering building a methane-to-propylene plant in the U.S. to capitalise on cheap American gas.

Meanwhile China has decided to scale down its ambitious downstream projects in the face of stiff competition from the U.S.

The drive to build LNG terminals and export natural gas abroad, threaten to end these favourable conditions and therefore is opposed by chemical manufacturers in the U.S. However, increased export facilities would be good news for upstream companies who at the moment often operate at a loss due to low gas prices.

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