LNG

Delfin Midstream is close to signing a contract with Samsung Heavy Industries for the supply of the second and third floating liquefied natural gas (FLNG) vessels for its Delfin LNG export project in Louisiana.

The new US administration is pushing for deregulation and American energy dominance on global markets by fast-tracking permitting for LNG terminals and related infrastructure. Such policies are poised to boost oil and gas production and underpin US LNG export growth.

President-elect Donald Trump has already outlined a radical shift in US energy policies which is expected to spur investment in the upstream sector, as well as related pipelines to bring shale oil and gas from America’s major unconventional oil and gas basins to liquefaction terminals along the US Gulf Coast. Rising shale oil and gas production is bound to create a supply length and free up additional gas resources for liquefaction and export, as well as for the American downstream market, notably for the power gen and industrial sector, analysts at Rystad Energy reckon.

In his pro-energy agenda, Trump vowed to override and reverse Biden-era regulatory pauses on US LNG export projects and increase leases on federal land for fracking of unconventional oil and gas. If implemented, these policies could almost double US LNG export capacity from currently 11.3 billion cubic feet per day (Bcfd) in 2023 to 22.4 Bcfd in 2030 – especially if major projects like Texas LNG and Calcasieu Pass (CP2) move forward, analysts noted. CP2 attracted extra scrutiny from climate campaigners as the single largest LNG project proposed to date.

Such an expansion is deemed “crucial” for the United States to stay a major player in the global LNG market, where demand is forecast to reach nearly 600 million tons (Mt) in 2030. Based on currently producing and under-development projects, a supply gap of 140 Mt will materialize in 2035 – but considering the turn-around in US energy policy, Rystad Energy CEO Jarad Rystad is optimistic:

“We’re moving from a time of energy scarcity to a time of energy abundance,” he commented. Capacity additions in both fossil fuels and renewables will, in his view, outpace increases in demand in 2025.

Europe bargains for US LNG

Looking at the global supply picture, expanded US LNG production and exports could be used as a bargaining chip by the Trump administration in trade negotiations with Europe, Russia and other major economies in Asia.

“Europe is still searching for reliable, long-term alternatives to Russian piped gas and LNG supply, while China-US LNG trade is likely to be affected by tariffs,” said Rystad Energy’s head of North America Gas & LNG Research, Emily McClain.

European leaders have already hinted at using US LNG purchases as a bargaining tool to avoid potential trade tariffs under Trump’s administration. “By aligning energy policies and prioritizing US imports, Europe could secure a stable energy supply while fostering stronger transatlantic relations,” she suggested.

Trade tariffs 2.0 risk to push up energy prices

Trump has a legacy of levying trade tariff during his first administration which has been a great cause of concern about policy risks on the future cost of LNG and global trade. A 25% steel tariff, for instance – as implemented in 2018 –led to significant price increases for LNG projects. And this trend that could repeat under Trump 2.0.

Another trade war with China, meanwhile, could disrupt the flow of LNG between the two countries, just as it did in 2019 when LNG exports were halted. “Such tariffs would not only elevate capital expenses for LNG projects,” McClain warned, “[they would] also risk slowing contracting activity with key buyers like China, jeopardizing long-term export growth.”

On the other hand, there is a risk of oversupply on global LNG markets especially if multiple new US LNG projects move forward simultaneously. An oversaturated market could erode prices, disadvantaging US producers compared to competitors like Qatar and Australia, analysts noted. But reliable US supply would also unlock new demand, particularly from price-sensitive markets in Asia – if executed strategically.