US to become world’s largest LNG exporter but not before 2025

The US is likely to become the leader in LNG export by 2025.

Starting in 2016, with approximately 1.2 billion cubic feet per day (bcfd) of export capacity, the US has become the third most important liquefied natural gas (LNG) exporting country with a total capacity of 8.9bcfd by the end of 2020.

By 2025, the additional capacity from new trains in existing plants and newly constructed plants will reach an estimated 14.3bcfd. This will make the US the second country in terms of LNG capacity and only below current leader Australia.

However, several approved plants could start production as early as 2023 if they are able to move ahead with a Final Investment Decision (FID). At the moment, there is too much uncertainty not only because of the existing oversupply of natural gas but also due to a potential decrease in demand and a shift towards more flexible and short-term contracts.

The second wave of LNG projects consists of plants that have received the US Federal Energy Regulatory Commission (FERC) approval but are not yet under construction. Most of these projects are expected to reach FID this year but this seems overoptimistic, given the current global natural gas market.

Specifically, LNG developers feel pressure from potential buyers to offer more flexible terms in their selling contracts. Under such circumstances, developers opt to wait for viable customers that accept some tradeoff between pricing terms and volume. There is arguably an incentive for pushing the first production to after 2025 when industry players see a change in the cycle with LNG demand exceeding supply.

Currently, the US has a total of 32 projects in different stages of development, from feasibility to commissioning, and their total capacity adds to approximately 42bcfd, which is almost the current LNG worldwide trade of approximately 45bcfd.

Overall, it is this high number of projects that increases the chance the US becoming a leading LNG exporting country this decade regardless of the timing for FIDs for individual projects.

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