The rising costs of building liquefied natural gas (LNG) terminals are challenging the competitiveness of U.S. gas exports. For instance, the Plaquemines export plant in Louisiana is over budget by $2.3 billion. Similarly, Golden Pass LNG, a joint venture between Exxon Mobil and QatarEnergy, exceeds its original budget by $2 billion.
Several factors contribute to this trend. Increased demand from LNG export plants is pushing natural gas prices higher. Analysts predict prices may rise to $6 per million standard cubic feet due to growing electricity usage and infrastructure needs. Jason Feer, an expert at Poten & Partners, highlighted that while the U.S. has abundant gas, cheap reserves are limited.
The Biden administration's pause on export permits further impacts global LNG dynamics. This policy is likely to keep international LNG prices elevated, benefiting current exporters. However, companies proposing new projects along the Gulf Coast face risks beyond regulations. Finding customers for these projects remains a significant hurdle, even with reduced regulatory barriers.
Internationally, political and economic factors also influence LNG demand. In China, political pressures limit the shift from coal to gas, potentially increasing LNG demand by 5% over the next decade. However, experts argue this switch is unlikely due to national security concerns. Meanwhile, Europe might return to Russian gas imports if peace in Ukraine is achieved, reducing demand for U.S. exports.
Brent oil-linked LNG prices are trending lower and could continue to decline. Experts suggest $12 per million British thermal units may become the global average for the next decade.
Explore more energy market updates and analysis of rising LNG costs on our website: FIXIO Markets.
Rising LNG costs are reducing U.S. competitiveness in global gas exports. Learn about challenges and market trends in this detailed analysis.
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