The US is building expensive terminals to export LNG. Now what?

LNG Exports, Another Trade War Victim

OilPrice reports China Halts U.S. LNG Imports Amid Tariff War

China hasn’t imported liquefied natural gas from the United States since early February, as the tariff war hit energy trade and could have long-term consequences for U.S. LNG export contracts.

The last LNG cargo to arrive in China from America was a tanker from Corpus Christi, which docked in the southern Chinese province of Fujian on February 6, according to shipping data cited by the Financial Times.

The Chinese tariffs on U.S. goods, including energy products, and the broader trade war between the world’s two biggest economies could have long-term consequences on the ability of new U.S. LNG export projects to attract anchor offtake commitments, analysts warn.

“I do not think Chinese LNG importers will ever contract any new US LNG,” Anne-Sophie Corbeau, a gas specialist at Columbia University’s Center on Global Energy Policy, told FT.

Following the tariffs, Chinese LNG buyers with long-term supply contracts with U.S. producers have started reselling the cargoes to Europe, Bloomberg reported, citing trading sources. What’s more, Chinese traders have grown cold towards new long-term commitments for future supply from the United States, instead seeking long-term deals with gas producers in the Middle East and the Asia Pacific.

Goodbye US LNG Hello Russia

Video Length: 00:08:07

Russia has emerged as the third-largest supplier of LNG to China behind Australia and Quatar. Russia and China have been negotiating over a new natural gas pipeline, the Power of Siberia 2 according to the video above.

EU Trades One Problem for Another

Reuters reports EU plan to end Russian oil and gas imports due out in May

The European Commission will announce a more detailed strategy to phase out Russian oil and gas imports next month, it said on Monday, after twice delaying the plan.

The EU has pledged to quit Russian fossil fuels by 2027 in response to Moscow’s 2022 invasion of Ukraine, but the Commission has delayed publishing its “roadmap” for how to do so. The plan was initially due last month. The Commission will now publish the roadmap on May 6, an agenda published on Monday showed.

While Russian pipeline gas deliveries have plunged since 2022, the EU increased its imports of Russian liquefied natural gas (LNG) last year, and the bloc still got 19% of its total gas and LNG supply from Russia in 2024.
Unlike oil, the EU has not imposed sanctions on imports of Russian gas.
Hungary has vowed to block Russian energy sanctions, which require unanimous approval from EU countries, while some other governments have also signalled unwillingness to approve sanctions on Russian LNG before the EU secures alternative supplies.

The EU has said it would consider buying more LNG from the United States, and Trump has said selling more energy to Europe would be a key focus of his administration’s efforts to eliminate its trade deficit with the EU.

U.S. LNG helped to plug the Russian supply gap in Europe during the 2022 energy crisis. Last year, the U.S. was Europe’s third-biggest gas supplier, after Russia and top supplier Norway.

Will the US Be a More Reliable Provider to the EU

Please consider Back to Russian gas? Trump-wary EU has energy security dilemma

U.S. liquefied natural gas helped to plug the Russian supply gap in Europe during the 2022-2023 energy crisis.

But now that President Donald Trump has rocked relationships with Europe established after World War Two, and turned to energy as a bargaining chip in trade negotiations, businesses are wary that reliance on the United States has become another vulnerability.

Against this backdrop, executives at major EU firms have begun to say what would have been unthinkable a year ago: that importing some Russian gas, including from Russian state giant Gazprom could be a good idea.

The head of French oil major TotalEnergies , Patrick Pouyanne, has warned Europe against over-relying on U.S. gas.

“We need to diversify, many routes, not over-rely on one or two,” Pouyanne told Reuters. Total is a large exporter of U.S. LNG and also sells Russian LNG from private firm Novatek .”Europe will never go back to importing 150 billion cubic meters from Russia like before the war … but I would bet maybe 70 bcm,” Pouyanne added.

France, which produces large amounts of nuclear power, already has one of the most diversified energy supplies in Europe.

Germany relied heavily on cheap Russian gas to help drive its manufacturing sector until the Ukraine war and has fewer options.

In Leuna Chemical Park, one of Germany’s biggest chemical clusters hosting plants of Dow Chemical and Shell, some makers say Russian gas should return quickly.

Russia used to cover 60% of local needs, mainly through the Nord Stream pipeline, which was blown up in 2022. “We are in a severe crisis and can’t wait,” said Christof Guenther, managing director of InfraLeuna, the operator of the park.
He said the German chemical industry has cut jobs for five quarters in a row, something not seen for decades.

“Reopening pipelines would reduce prices more than any current subsidy programmes,” he said. “It’s a taboo topic,” Guenther added, saying many colleagues agreed on the need to go back to Russian gas.
Almost a third of Germans voted for Russia-friendly parties in the February federal election.

In the state of Mecklenburg-Vorpommern, the east German region where the Nord Stream pipeline comes ashore after running from Russia under the Baltic Sea, 49% of Germans want a return to Russian gas supplies, a poll carried out by the Forsa institute found.

“We need Russian gas, we need cheap energy – no matter where it comes from,” said Klaus Paur, managing director of Leuna-Harze, a mid-sized petrochemical maker at the Leuna Park. “We need Nord Stream 2 because we have to keep energy costs in check.”

U.S. LNG Expansion Plans Unravel as Trade War Escalates

CleanTechnica reports U.S. LNG Expansion Plans Unravel as Trade War Escalates

China has just suspended all LNG imports from the United States. No warning, no phasedown, just an apparent state directive that Chinese buyers, including the national oil companies, were no longer to sign, lift, or receive U.S. liquefied natural gas.

But the trade war launched in 2018 by the first Trump administration slammed on the brakes. China imposed retaliatory tariffs on U.S. LNG — first 10%, then 25% — and imports plummeted to near zero by 2019. Only the Phase One trade agreement in early 2020 restarted flows. That year, U.S. LNG volumes to China rebounded to over 4 million tonnes, rising to a record 9.3 MTPA in 2021. In that banner year, China represented over 12% of total U.S. LNG exports, and the deals were worth over $3.4 billion in nominal dollars. Dozens of long-term contracts were signed, and U.S. project developers counted on China to underwrite future expansion.

That faith proved misplaced. By 2022, U.S. LNG flows to China dropped sharply as Europe, reeling from Russia’s war in Ukraine, bid aggressively on spot cargoes.

Chinese imports hovered around 2 MTPA in 2022 and rose modestly in 2023, but never recovered to their 2021 peak. Now, with Beijing’s abrupt suspension of U.S. LNG, the relationship has collapsed entirely. Contracts are frozen. Cargoes already loaded are being diverted. And any terminal with offtake exposure to Chinese buyers is facing the real prospect of default or renegotiation. In just a few weeks, a decade of growth has been reversed.

The loss of China as a customer comes as the U.S. LNG industry is still navigating Europe’s shifting role. Europe became the largest destination for U.S. LNG almost overnight after 2022, when Russian pipeline gas was cut off and European countries scrambled for replacements. U.S. export volumes to Europe surged to over 60% of total shipments in early 2023, with countries like France, the Netherlands, and the UK relying on American LNG to keep industries running and homes heated.

As early as 2024, forward-looking European utilities began declining 20-year LNG deals, instead favoring short-term contracts or portfolio purchases. The message was clear: European gas demand was peaking and would soon be in structural decline.

That left the U.S. LNG sector reliant on a delicate two-legged stool: China and Europe. And now one leg has been kicked out from under it.

Over 20 proposed U.S. LNG terminals are in various stages of development. Some, like Venture Global’s CP2, Sempra’s Port Arthur, and NextDecade’s Rio Grande, have already secured partial financing or begun early construction. Others remain in the permitting and contracting phase, awaiting final investment decision (FID). Across the Gulf Coast, the vision has been consistent: build more capacity, serve growing Asian demand, and use flexible destination clauses to capitalize on European price spikes.

In a series of publications over the past three years, I’ve argued that this expansion was speculative at best. The assumptions behind the next 100 MTPA of capacity were shaky: that global demand would continue rising, that geopolitics would remain stable, that carbon pricing wouldn’t bite, and that markets like China and India would buy whatever the U.S. was selling. I’ve pointed out that most of these new terminals were being justified on the back of long-term contracts that wouldn’t hold up to scrutiny, and that a significant share of planned capacity risked becoming stranded as demand plateaued or declined. Now, those warnings are materializing.

The implications for these terminals are severe. Without Chinese offtake, nearly a third of the volume committed to future U.S. projects has evaporated. Some developers will attempt to resell this capacity, but few buyers have China’s appetite, credit profile, or willingness to sign 20-year deals. With Europe capping long-term gas infrastructure growth and preparing for a long-term decline in fossil imports, the second fallback market is shrinking fast. Projects that have yet to reach FID may be shelved entirely. Banks and institutional investors will demand more conservative projections. Risk premiums will rise. Insurance may become harder to obtain. Terminal utilization rates will fall short of modeled expectations, and the entire economics of Gulf Coast LNG will have to be revisited.

The final irony is political. U.S. oil and gas executives spent heavily during the 2024 election cycle, once again backing Trump in the hopes of favorable policies, looser regulations, and accelerated fossil fuel exports. Billions were spent on lobbying, campaign donations, and friendly media to amplify the message that fossil fuels meant freedom and prosperity.

And what did they get in return? A trade war that shuttered their second-largest LNG market, destabilized long-term supply relationships, and sent shockwaves through global energy finance. 

It makes no economic sense for the EU to buy expensive US LNG when it can get cheap Russian gas by pipeline.

And closer to home, the EU should look to Iran and the Mideast.

Trump wanted bilateral relationships. He succeeded in moving China and Russia closer, China and India closer, China and Iran closer, India and Iran closer, and now it seems the EU and Russia closer.

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