Rising LNG terminal costs are making new U.S. projects less competitive, analyst says

By Curtis Williams

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

The Biden administration’s suspension of export permits will likely keep global LNG prices elevated for longer and benefit existing exporters, Poten said at his Global LNG Outlook conference.

Jason Feer, Poten’s business intelligence chief, also said that for companies proposing new export facilities along the U.S. Gulf Coast, attracting new customers will pose a greater risk than regulation.

Risks facing LNG exporters include China weighing political risks, limiting its move away from coal and increasing its LNG demand by 5% over the next decade. Europe will most likely buy Russian gas again if there is peace in Ukraine, said Feer.

China’s weaker outlook for LNG demand reflects China’s desire not to increase its reliance on U.S. LNG and its fears that further coal plant shutdowns will lead to layoffs.

In the short term, Brent oil LNG prices are trending downward and could fall further. Feer said $12 per million British thermal units was the new global average price for LNG and that it would remain that way over the next decade.

(Reporting by Curtis Williams; Writing by Gary McWilliams; Editing by Jonathan Oatis)