Poten & Partners addresses Rising LNG Terminal Costs

Rising costs of building and equipping new U.S. liquefied natural gas plants will reduce the competitiveness of U.S. gas exports, LNG analysts at Poten & Partners predicted on Tuesday.

The Biden administration's export permitting pause likely will keep global LNG prices higher for longer, and benefit existing exporters, Poten said at its Global LNG Outlook conference.

Jason Feer, Poten's business intelligence chief, also said that for the firms proposing new export plants along the U.S. Gulf Coast, landing new customers will present a greater risk than regulation.

Among the risks facing LNG exporters: China's weighing of political risks limiting its switch away from coal, and lifting its LNG demand by 5% over the next decade. Europe is highly likely to resume buying Russia gas if there is peace in Ukraine, Feer said.

China's slower LNG demand outlook reflects its desire to not increase its reliance on U.S. LNG and its worries that additional closures of coal-fired power plants will lead to layoffs.

In the near term, Brent oil-linked LNG prices are trending lower and could decline further. Feer said $12 per million British thermal units is the new average global price for LNG and that should continue for the next decade.