Rising Costs Impact U.S. LNG Export Competitiveness

HOUSTON (Reuters) – Rising costs of constructing and equipping new U.S. liquefied natural gas (LNG) plants will reduce the competitiveness of U.S. gas exports, LNG analysts at Poten & Partners predicted on Tuesday.

The Biden administration's export permitting pause is likely to keep global LNG prices higher for longer, which would benefit existing exporters, Poten stated at its Global LNG Outlook conference.

Jason Feer, Poten's Business Intelligence chief, indicated that firms proposing new export plants along the U.S. Gulf Coast may face greater risks in landing new customers than from regulatory issues.

Among the risks facing LNG exporters are China’s political risk considerations which may limit its transition away from coal, ultimately increasing its LNG demand by 5% over the next decade. Feer also mentioned that Europe is likely to resume purchasing Russian gas if peace is restored in Ukraine.

In the short term, Brent-oil linked LNG prices are trending lower and could decline further, according to Feer at Poten.