Rising US gas prices threaten LNG export competitiveness

Rising natural gas prices in the US could make its liquefied natural gas (LNG) exports uncompetitive in global markets, according to Fulcrum LNG CEO Jesus Bronchalo. Speaking at Rice University's Baker Institute, Bronchalo warned that if domestic prices continue climbing, US LNG projects like Sempra's Port Arthur LNG could lose their edge. He specifically cited the Henry Hub benchmark, stating that higher prices would make US LNG too expensive to remain competitive.

Despite being one of the highest-cost LNG producers globally, the US offers price stability that appeals to buyers, noted Joshua Lubarsky, president of maritime firm Seapath Group. This stability is a key factor for international buyers, even as production costs remain elevated.

The financing landscape for US LNG projects is also evolving, with a shift toward private equity backed by sovereign wealth funds. Julie Mayo, general counsel of Sempra Infrastructure, highlighted this trend, citing Sempra's own use of private equity for its expansion. This marks a departure from traditional external loans, reflecting a broader change in how LNG projects are funded.

Sempra, a major US LNG exporter, operates facilities like Cameron LNG and Port Arthur LNG, which are either in production or under development. The company's approach to financing underscores the adaptive strategies being employed in the face of rising costs and competitive pressures.