Triggered by incoming U.S. President Donald Trump, the next four years could prime the liquefied natural gas (LNG) markets for a golden era. That’s what Rystad Energy said in a release sent to Rigzone by the Rystad team this week, adding that, “based on his campaign pledge, the returning president’s expected policies are likely to accelerate U.S. LNG infrastructure expansion through deregulation and faster permitting, bolstering global supply”. Rystad noted in the release that this could strengthen the sentiment around global LNG supply after years of uncertainty, helping to unleash long-term demand. The company also warned, however, that “an untimely supply boost will heighten the risk of a medium-term market glut, which would put downward pressure on prices”. Trump’s agenda includes “fast-tracking permits for stalled LNG projects, reversing Biden-era regulatory pauses, and increasing leases on federal land for gas production,” Rystad highlighted in the release. “If implemented, U.S. LNG export capacity could nearly double from 11.3 billion cubic feet per day in 2023 to 22.4 billion cubic feet per day in 2030, with major projects like Texas LNG and Calcasieu Pass (CP2) moving forward despite environmental pressures,” Rystad added. The company stated in the release that this expansion is crucial for the U.S. to remain a major player in the global LNG market, pointing out that demand is expected to reach almost 600 million tons in 2030. Rystad noted in the release that, based on currently producing and under-development projects, a supply gap of 140 million tons will materialize in 2035. Geopolitics, Tariffs Rystad highlighted in its release that the geopolitical implications of expanded U.S. LNG production are substantial, stating that the Trump administration could leverage LNG as a bargaining chip in trade negotiations with Europe, Russia, and other major economies. “Europe is still searching for reliable, long-term alternatives to Russian piped gas and LNG supply, while China-U.S. LNG trade is likely to be affected by tariffs,” Rystad said. Rystad stated in the release that Europe stands to be a significant beneficiary of Trump’s LNG expansion policies, “particularly as the EU strives to further reduce reliance on Russian gas”. “European leaders have already hinted at using U.S. LNG purchases as a bargaining tool to avoid potential trade tariffs under Trump’s administration,” it said. “By aligning energy policies and prioritizing U.S. imports, Europe could secure a stable energy supply while fostering stronger transatlantic relations,” it added. The company also warned that Trump’s history of imposing tariffs during his first administration raises concerns about the potential impact on LNG infrastructure costs and trade. “A 25 percent steel tariff implemented in 2018 led to significant price increases for LNG projects, a trend that could repeat under Trump 2.0,” Rystad said. “Additionally, another trade war with China could disrupt the flow of LNG between the two countries, just as it did in 2019 when LNG exports were halted,” it added. “Such tariffs would not only elevate capital expenses for LNG projects but also risk slowing contracting activity with key buyers like China, jeopardizing long-term export growth,” it continued. Highly Sensitive Market In the release, Rystad warned that the global LNG market is highly sensitive to supply-demand fundamentals. “The risk of oversupply looms large, especially if multiple new U.S. LNG projects move forward simultaneously,” it said. “An oversaturated market could erode prices, disadvantaging U.S. producers compared to competitors like Qatar and Australia,” it added. “However, reliable U.S. supply would also unlock new demand, particularly from price sensitive markets in Asia, if executed strategically,” it continued. In the release, Emily McClain, Head of North America Gas & LNG Research at Rystad Energy, said, “Trump’s accelerated LNG approvals could further strengthen the U.S. position in the global energy market, meeting critical demand as the world transitions away from other energy sources”. “However, this rapid expansion risks oversaturating the market, potentially driving down prices and profitability for producers,” McClain warned. “The key challenge will be balancing domestic growth ambitions with global stability to ensure long-term market share and competitiveness,” McClain added. Rigzone has contacted the Trump transition team and the European Commission for comment on Rystad’s release. At the time of writing, neither have responded to Rigzone’s request yet. BMI, Rystad Update In a BMI report sent to Rigzone last Friday by the Fitch Group, BMI analysts highlighted the “potential for greater supplies of LNG on the market should Trump pivot from the Biden administration’s restrictions on LNG exports and support greater gas production”. “We nonetheless maintain our near-term Henry Hub price forecast with an expected 41 percent year on year growth to $3.4 MMBtu in 2025, driven by increased U.S. LNG demand and reduced net gas imports from Canada which will create some tightness in the U.S. market,” the analysts added. In a Rystad gas and LNG market update from Rystad Energy Vice President Kaushal Ramesh, which was sent to Rigzone on November 11, Ramesh said, “in the medium term … [Trump] is expected to reinforce the U.S.’ role as a leading oil and LNG exporter”. Rigzone has also contacted the Trump transition team for comment on BMI and Ramesh’s statements. At the time of writing, the Trump team has not yet responded to this request either. USA LNG Exports In its latest short term energy outlook (STEO), which was released recently, the U.S. Energy Information Administration (EIA) projected that U.S. LNG gross exports will average 12.1 billion cubic feet per day in 2024 and 13.8 billion cubic feet per day in 2025. The EIA forecast in its November STEO that these exports will average 13.2 billion cubic feet per day in the fourth quarter of this year, 13.8 billion cubic feet per day in the first quarter of 2025, 13.3 billion cubic feet per day in the second quarter, 13.0 billion cubic feet per day in the third quarter, and 14.9 billion cubic feet per day in the fourth quarter. In its previous STEO, which was released in October, the EIA projected identical U.S. LNG gross export figures to those above. Both STEOs put 2023 U.S. LNG gross exports at 11.9 billion cubic feet per day. “We expect the Henry Hub price to average around $2.90 per MMBtu in 2025, as global demand for U.S. liquefied natural gas exports, a component of U.S. natural gas demand, continues to increase,” the EIA said in its November STEO. In its October STEO, the EIA said, “U.S. natural gas exports, particularly in the form of liquefied natural gas (LNG), are the primary driver of growth in U.S. natural gas demand in our forecast”. The EIA highlighted “ample demand for U.S. LNG in the international market” in that STEO.
