The US LNG sector has raised concerns with the Trump administration over the latest regulations against Chinese operated and Chinese built ships, saying that the industry cannot meet the requirement to move to US-flagged ships without significant disruption, the UK’s Financial Times reported on Sunday.
In letters sent to US government departments last week by the American Petroleum Institute (API), industry leaders warned that the rules, unveiled by US trade representative, Jamieson Greer on 17th April, could jeopardise a $34 bill annual export market.
Although the LNG industry has secured a three-year grace period to delay compliance, the rules still require companies to transition to US-built and US-flagged ships phased over a 22-year timeline.
Failure to comply could result in the suspension of export licenses.
API’s letter addressed to the US Secretaries of Energy and the Interior stress that the LNG sector has no realistic way to meet the deadline.
Sources talking with the media outlet claimed that the US currently lacks both LNG-capable ships and the shipyard capacity needed to build them in time for the 2029 deadline.
In its letter, the API warned that enforcing these rules would erode US leadership in the global LNG market and weaken its broader standing as an energy superpower.
The organisation also expressed concern that future administrations might weaponise similar trade mechanisms to halt energy exports.
After overtaking Australia in 2023, the US is now the world’s leading LNG exporter, shipping 11.9 bill cu ft per day, enough to meet the combined natural gas demand of Germany and France. In addition, the US aims to double its exports by the end of this decade.
Law firm, Watson Farley Williams explained that in Annex IV – Restriction on LNG exports - of the recirculated rules, starting on 17th April, 2028, at least 1% of all LNG intended for export by ship in a calendar year must be shipped on a US-built vessel.
This percentage increases annually from 2029, plateauing at 15% in April, 2047.
The restrictions on LNG exports will be suspended for up to three years, if the vessel owner orders and takes delivery of a US-built vessel of equivalent or greater capacity during the first period.
This suspension does not apply to Chinese-owned or leased vessels.
LNGCs will be also exempt from the other fees to be levied on Chinese built and owned vessels.
