Rising US Gas Prices Threaten LNG Competitiveness

US liquefied natural gas (LNG) projects are facing a growing challenge as domestic gas prices climb, potentially eroding their competitive edge. Jesus Bronchalo, CEO of Fulcrum LNG, highlighted this concern during a panel discussion at Rice University’s Baker Institute. He warned that rising US gas prices, particularly at the Henry Hub benchmark, could make production costs too high for the country to remain competitive in the global LNG market.

While the US is among the most expensive locations for LNG production, Joshua Lubarsky, president of Seapath Group, noted that its stable gas price dynamics still appeal to buyers. This stability may offset some of the higher costs, though the long-term impact of rising prices remains uncertain.

The financing landscape for US LNG projects is also shifting, with a growing reliance on private equity and government-backed sovereign wealth funds. Julie Mayo, general counsel at Infrastructure, cited Sempra’s use of private equity for expansion as an example of this trend, marking a departure from traditional external loans. Sempra, one of the largest US LNG exporters, operates facilities like Cameron LNG and the Port Arthur development.