Rising US Gas Prices Threaten LNG Competitiveness

The CEO of Fulcrum LNG, Jesus Bronchalo, warned that rising domestic natural gas prices in the US could make liquefied natural gas (LNG) projects uncompetitive. Speaking at a panel discussion at Rice University’s Baker Institute on Tuesday, Bronchalo said prices are likely to keep climbing, making the US one of the most expensive places in the world to produce LNG. He cautioned that the Henry Hub benchmark, a key US gas price indicator, may soon reach a point where profitability and competitiveness are threatened.

Despite the high costs, Joshua Lubarsky, president of maritime firm Seapath Group, highlighted that US gas price dynamics can offer stability for buyers. This stability is a critical factor for LNG purchasers, even as production costs remain elevated.

The US LNG industry is also seeing shifts in financing, moving away from traditional external loans. Julie Mayo, general counsel of Sempra Infrastructure, noted the increasing use of private equity backed by government-supported sovereign wealth funds. Sempra, a major US LNG exporter with facilities like Cameron LNG and Port Arthur, exemplifies this new financing model.