OREANDA-NEWS. The agreement creating the Trans-Pacific Partnership (TPP) free trade area will allow the US to keep intact the restriction on crude exports and the current LNG export licensing system.

But the US will eliminate tariffs on crude imports and a few categories of petroleum products once the agreement is in effect. Canada and Mexico are the only major exporters into the US among TPP members.

The value of imported crude and products that will become duty-free was $107bn last year, almost all of it in the crude oil category, according to the US Department of Commerce. Existing tariffs on crude imports are 8-10?/bl, so the change is not material for producers or importers.

Negotiators released the full text of the agreement today, a month after reaching agreement on creating a free trade area uniting 12 nations with a collective GDP last year of $28 trillion. The TPP signatories are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.

The agreement allows member states to keep in place long-standing restrictions on exports of products deemed essential to the exporting country. The US restricts exporting crude and has a much tougher review process for countries with which it does not have free trade agreements.

The TPP agreement does not explicitly confer preferential terms of LNG trade with the US to signatories, which include the world's largest importer of LNG, Japan. Only 18 countries at present have preferential terms of LNG trade with the US, and only South Korea is a major importer on that list.

Japan in the past has pushed for streamlining the permit process for importing LNG from the US. But developers already are building five LNG export projects in the US with peak capacity of 71mn t/yr (9.1 Bcf/d), approaching Qatari output of 77mn t/yr. Total capacity approved by US regulators for exports to all destinations is 110mn t/yr (14 Bcf/d).

The US Congress is not expected to take up the agreement until next year. President Barack Obama's recently-won ability to fast-track international trade bills requires a 90-day advance notification to Congress of the presidential signature on the agreement. The White House did not provide a timeline for the president's signature.

The US administration has not highlighted any effects on the energy sector from the TPP deal. By contrast, Canada and Australia have talked about the deal's value in facilitating their exports of natural resources.

The deal faces an immediate hurdle in Canada, where the Liberal Party won an election two weeks after the completion of TPP talks.

The Canadian Foreign Affairs and International Trade department declined to comment. Canadian prime minister Justin Trudeau is not expected to oppose the deal, US trade representative Michael Forman has said.