Triggered by incoming US President Donald Trump, the next four years could prime the liquefied natural gas (LNG) markets for a “golden era”, according to a new Rystad Energy report.
“Based on his campaign pledge, the returning president’s expected policies are likely to accelerate US LNG infrastructure expansion through deregulation and faster permitting, bolstering global supply,” reads a Nov 26 note by the research firm.
This could strengthen the sentiment around global LNG supply after years of uncertainty, helping to unleash long-term demand, say analysts Emily McClain and Jan-Eric Fähnrich. “Even so, an untimely supply boost will heighten the risk of a medium-term market glut, which would put downward pressure on prices.”
President-elect Trump’s pro-energy agenda includes fast-tracking permits for stalled LNG projects, reversing Biden-era regulatory pauses and increasing leases on federal land for gas production.
If implemented, US LNG export capacity could nearly double from 11.3 billion cubic feet per day (Bcfd) in 2023 to 22.4 Bcfd in 2030, with major projects like Texas LNG and Calcasieu Pass moving forward despite environmental pressures.
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The US Federal Energy Regulatory Commission (FERC) determined in March 2019 that the construction and operation of Glenfarne Group’s Texas LNG project “would result in adverse environmental impacts”, according to its final environmental impact statement.
However, the statement also noted these impacts “would be reduced to less than significant levels” with proposed mitigation measures.
The Texas LNG project involves building and operating a LNG terminal to liquefy and export natural gas at Brownsville Ship Channel in Cameron County, Texas.
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In August, a US federal appeals court said FERC failed to issue proper environmental assessments for the project. FERC will have to issue supplemental environmental impact statements for the Texas LNG project and NextDecade’s Rio Grande LNG project.
Still, McClain and Fähnrich say such expansions are crucial for the US to remain a major player in the global LNG market, with demand expected to reach almost 600 million tonnes (Mt) in 2030. “Based on currently producing and under-development projects, a supply gap of 140Mt will materialise in 2035.”
The geopolitical implications of expanded US LNG production are also substantial, say Rystad Energy. 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-US LNG trade is likely to be affected by tariffs, add the analysts.
“Trump’s accelerated LNG approvals could further strengthen the US position in the global energy market, meeting critical demand as the world transitions away from other energy sources,” says McClain, Rystad Energy’s head of North America gas and LNG research. “However, this rapid expansion risks oversaturating the market, potentially driving down prices and profitability for producers. The key challenge will be balancing domestic growth ambitions with global stability to ensure long-term market share and competitiveness.”
Trump tariffs
That said, Trump’s history of imposing tariffs during his first administration raises concerns about the potential impact on LNG infrastructure costs and trade.
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A 25% steel tariff implemented in 2018 led to significant price increases for LNG projects, a trend that could repeat under Trump 2.0. Already, Trump vowed on Nov 25 to slap 25% tariffs on all goods from Mexico and Canada.
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, say Rystad Energy’s analysts.
Such tariffs would not only elevate capital expenses for LNG projects but also risk slowing contracting activity with key buyers like China, jeopardising long-term export growth, they add.
While Trump’s policies aim to bolster US energy independence and dominance, the global LNG market is “highly sensitive” to supply-demand fundamentals, say McClain and Fähnrich. “The risk of oversupply looms large, especially if multiple new US LNG projects move forward simultaneously.”
An oversaturated market could erode prices, putting US producers at a disadvantage compared to competitors like Qatar and Australia. However, reliable US supply would also unlock new demand, particularly from price sensitive markets in Asia, if executed strategically, add the analysts.
Notably, Europe stands to be a significant beneficiary of Trump’s LNG expansion policies, particularly as the European Union (EU) strives to further reduce reliance on Russian gas, say McClain and Fähnrich.
European leaders have already hinted at using US LNG purchases as a bargaining tool to avoid potential trade tariffs under Trump’s administration. By aligning energy policies and prioritising US imports, Europe could secure a stable energy supply while fostering stronger transatlantic relations, they add.
Chart: Rystad Energy
