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Business News/ News / World/  House GOP Considering Requiring LNG Approvals in Ukraine Aid
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House GOP Considering Requiring LNG Approvals in Ukraine Aid

Republican House leadership is considering including a provision in a potential aid package for Ukraine that would require the Biden administration to approve some liquefied natural gas export projects, according to people familiar with the matter.

House GOP Considering Requiring LNG Approvals in Ukraine AidPremium
House GOP Considering Requiring LNG Approvals in Ukraine Aid

(Bloomberg) -- Republican House leadership is considering including a provision in a potential aid package for Ukraine that would require the Biden administration to approve some liquefied natural gas export projects, according to people familiar with the matter. 

The wording, which has yet to be finalized, could set a threshold that effectively requires some LNG export projects that are awaiting approval by the Department of Energy to be green-lighted, one of the people said. The situation remains fluid and discussions on the matter remain in flux, said the person, who was granted anonymity to discuss non-public deliberations. 

It remains to be seen if the package that Speaker Mike Johnson brings to the floor, which could also include border security reforms, could get the needed votes to pass the House and if President Joe Biden would sign it into law. A White House spokesperson previously said a report that White House aides were open to lifting the ban “is not true." House Democratic leaders are aware of the language and are opposed, two Democrats said. Its passage would alienate progressives, whom Biden has already angered over his handling of Israel as well as the approval of a massive oil drilling project in Alaska.

A spokesperson for Johnson, who has previously argued the administration’s LNG permit pause is hurting Ukraine by increasing reliance on Russian natural gas, declined to comment Thursday.

Projects considered “ripe" for decision before the Energy Department because they have received requisite approvals by the Federal Energy Regulatory Commission include LNG export facilities in Louisiana proposed by privately held Commonwealth LNG, Magnolia LNG, as well as the Lake Charles export project planned by Energy Transfer LP and an expansion of an Sempra’s existing LNG export facility in Port Arthur, Texas. Notably, such an approach would not benefit the CP2 massive export facility also in Louisiana planned by Venture Global LNG Inc. which is still pending before FERC. 

Johnson, speaking in an Easter interview on Fox News Sunday, hinted that he planned to bring a Ukraine aid package that could include language reversing the permitting pause to the floor after the House returns from its spring recess April 9. 

Read More: Biden Freezes Licenses to Export Gas, Imperiling Projects

The Biden administration ordered the halt in approving new licenses to export LNG to European and some Asian countries that are not US free-trade partners while the Energy Department scrutinizes how the shipments affect climate change, the economy and national security. The moratorium threatens to disrupt plans for multibillion-dollar export projects along the US Gulf Coast.

While the administration isn’t inclined to trade away the pause, the president’s support could hinge on how such a measure is worded, Clearview Energy Partners said in a note Wednesday, that added one possible approach Johnson may take could be to condition funding in the supplemental on the approval of a specific amount of export capacity. 

“If he had no other option, we believe President Biden might sign a bill which merely blocked the pause, as the DOE still could retain discretion over the pace" of LNG export approvals, the Washington-based consultancy said. “However, if the bill were to mandate approvals, we think it could draw a veto."

The inclusion of language rolling back the administration’s LNG permit pause could entice some previously reluctant Republicans to vote for the Ukraine aid package by giving them a win in blocking a Biden climate priority and a chance to argue they are countering Russia and helping American natural gas producers. But the move would also alienate Democrats whose support would be needed to pass the measure and are pushing back strongly against the measure’s inclusion. 

“The vast majority of our caucus would see this as going backward on climate at the worst possible time," said Representative Jared Huffman, a California Democrat. “We have the votes to pass Ukraine aid without doing a Faustian deal." 

Other potential legislative options could include setting a deadline to approve projects or ordering specific ones to be approved, said Fred Hutchison, CEO of trade group LNG Allies.

“We remain hopeful that the January 26 ‘pause’ on new U.S. LNG export licenses can be undone," Hutchison said. “However, just reversing the formal pause isn’t sufficient since DOE had been under and informal pause since March 2023."

--With assistance from Ruth Liao.

(Adds comment in the final two paragraphs. A previous version corrected language in the third paragraph referencing House Democratic leaders.)

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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Published: 05 Apr 2024, 05:28 AM IST
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