Investigating the potential effects of U.S. LNG exports on global natural gas markets

• This analysis is conducted using the World Gas Model, a large-scale market equilibrium system of the global gas markets.
• The U.S. LNG displaces market shares from other suppliers of the Asian markets.
• The U.S., given a maximum destination-free export capacity of 120 Bcm/y, will export approximately half of that to Asia.
• The impact of a global 20-20-20 policy on the natural gas market is significant.
• Nord Stream and South Stream pipelines might reduce natural gas flows significantly to transit countries.

There have been increasing debates regarding whether the United States should export liquefied natural gas (LNG) to the global market. Using the World Gas Model, a large-scale game theoretic model, this paper investigates the potential effects of U.S. LNG exports on the domestic and global markets. U.S. LNG export scenarios relate to a Global 20/20/20 policy and competition with new pipeline projects (e.g., Nord Stream, South Stream, and Southern Corridor projects) are also considered. We find that the average U.S. domestic natural gas prices increase approximately 10.9% given 123 billion cubic meters of LNG exports and that natural gas prices in Europe and Asia decrease significantly. In addition, less expensive U.S. LNG is competitive in European and Asian gas markets and displaces more expensive suppliers in European and Asian gas markets. Under the European pipeline scenario, Russia is expected to reduce natural gas flows to transit countries by more than 50% when the Nord Stream and South Stream pipelines become available.