$80 Billion Alaska LNG Projects Face Delays, Sanctions Risks

The ambitious plans to turn Alaska into a major liquefied natural gas (LNG) export hub are facing significant challenges. Glenfarne's $54.5 billion Alaska LNG project, which aims to supply Japan and South Korea with 20 million tonnes of LNG per year, has been delayed due to the failure of Alaska's legislature to pass tax breaks. This move is crucial for securing funding, as the project requires binding LNG offtake contracts for an additional 3 million tonnes.

The project still needs buyers for this extra capacity and must convert these commitments into binding contracts before taking a final investment decision. Analysts note that the economics remain difficult, with major North Slope producers having already examined the project closely and declined to proceed due to cost concerns.

Polar LNG, another $25 billion project, is also facing obstacles. The project relies on technology from Novatek, a Russian company under sanctions, which adds significant risk. Polar LNG's CEO Joel Riddle acknowledges that Asian buyers are placing a higher risk premium on Middle East gas, but believes this increases interest in U.S. supply from Alaska.

Both projects must secure up to $80 billion in funding and start construction before 2029 to avoid potential restrictions from a future Democrat-led administration on Alaska fossil-fuel projects.