Developers of U.S. LNG export projects have started taking final investment decisions on new facilities this year, with several plans expected to add in 2025 to Woodside’s Louisiana LNG approval, despite rising construction costs due to President Trump’s steel and aluminum tariffs.
The biggest LNG developers are confident they would give the investment go-ahead to their projects sooner rather than later, top executives said on the companies’ earnings calls.
Developers of at least seven U.S. LNG projects have recently said that they are targeting FID on these this year, a Reuters overview of company statements showed . If these projects go ahead, they could triple U.S. LNG export capacity by the end of the decade, adding to projects already under construction after FIDs taken in previous years.
To de-risk the capital investment in new projects, some project developers are looking to sell part of their stakes in the facilities to infrastructure funds or industry partners, alongside efforts to secure long-term offtake agreements for the LNG to come out of the projects.
Developers are also looking to source more steel domestically and mitigate the impact of tariffs.
Although President Trump has backed off – for now – from ‘retaliatory’ tariffs, the 25% tariff on steel and aluminum remains, as does the blanket 10% tariff on all goods imported into the United States.
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U.S. LNG developers acknowledge there could be exposure to tariffs, but they have taken proactive measures to minimize the impact on costs.
Australia’s Woodside was the first to take FID on a U.S. export project this year, approving investment in April in the Louisiana LNG, the former Driftwood LNG project which it bought as part of its acquisition of Tellurian for $1.2 billion last year.
Ahead of the FID, Woodside had already sold 40% in Louisiana LNG to Stonepeak, under which the infrastructure investment firm will provide $5.7 billion towards the expected capital expenditure for the foundation development of the facility.
Last week, Woodside signed a non-binding collaboration agreement with Saudi Arabia’s oil giant Aramco to explore Aramco’s potential acquisition of an equity interest in and LNG offtake from the Louisiana LNG project.
More FIDs on U.S. LNG export projects are expected to follow this year.
Jack Fusco, President and CEO of the top U.S. LNG exporter, Cheniere, said on the Q1 earnings call the company remains confident that it would receive all necessary regulatory approvals to be able to sanction the trains 8 and 9 expansion project at Corpus Christi in 2025.
Sempra, which develops the Port Arthur LNG project, expects to take FID on Port Arthur LNG Phase II by the end of 2025, “as we’re continuing to field strong commercial interest in the project,” Sempra’s Executive Vice President and CFO, Karen Sedrick, told the earnings call .
“With that said, uncertainty in the macroeconomic environment may affect the timing of project development. As we have done in the past, we’ll continue to exercise patience as we seek to mitigate cost risk and lock in favorable long term economics,” Sedrick added.
“On the tariff front, Port Arthur LNG began admitting all items in the designated foreign trade zones into The United States as a preemptive action back in February to avoid higher costs being levied on these items,” the executive noted.
Steel for Port Arthur LNG train one was fully sourced domestically, Sempra’s CEO Jeff Martin said on the call.
“And I would just mention that the remaining tariff exposure for Phase one is estimated to be about 1% of CapEx,” Martin said, adding, “We feel like we’re in very good shape relative to tariffs.”
U.S. pipeline giant Energy Transfer is targeting FID on its Lake Charles LNG export project in Louisiana by the end of the year as it is progressing with contracting LNG offtake volumes.
Venture Global is urging the Federal Energy Regulatory Commission (FERC) to greenlight its third liquefaction plant, CP2 in Louisiana, by the middle of the year.
“The current regulatory environment is supportive of The U. S. LNG industry and we have been thrilled with the backing we have received from President Trump and the current administration, members of Congress, governors including Governor Landry, Louisiana state legislators from both sides of the aisle and government and industry representatives from allied nations,” Venture Global CEO Mike Sabel said on the earnings call.
“Taking advantage of these permitting tailwinds, we have commenced the FID process for Phase one of the CP2 project with our well established banking syndicate.”
By Tsvetana Paraskova for Oilprice.com
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