In his opening weeks as US President, Donald Trump has issued many new executive orders, as well as revoking 80 executive actions of former President Joe Biden. Trump was quick to lift the moratorium on new US licenses for LNG, a policy he vigorously opposed during his campaign. 1
Biden had called a pause at the beginning of last year to allow a climate, economic and national security study of increasing US LNG capacity. 2 That study, released last month, found that increased exports would raise natural gas prices for US consumers and increase global emissions. 3
However, Trump’s order claimed that it was “in the national interest to unleash America’s affordable and reliable energy and natural resources. This will restore American prosperity —- including for those men and women who have been forgotten by our economy in recent years. It will also rebuild our Nation’s economic and military security, which will deliver peace through strength.” 4
LNG supply and demand
However, the path from new LNG supply to American prosperity may not be a straightforward one. Analysts currently expect LNG trading revenues to fall in 2025 after the markets finally calm following the price swings caused by Russia’s invasion of Ukraine. 5 Industry groups are also predicting that an oversupply of LNG in coming years will send prices lower. According to the FT, consultancy Rystad Energy expects supply to outstrip demand in 2027 and for several years after as more US projects come online and Qatar, the third-largest LNG exporter, boosts production. 6
Christopher Kuplent, research analyst at Bank of America, also told the FT that major energy firms, especially Shell and TotalEnergies, were preparing for oversupply by increasing LNG contracts tied to the price of oil rather than gas. 7
Trump was quick to offer Europe the security of LNG supply from the US, saying at the World Economic Forum at Davos that he would guarantee supplies. 8 TotalEnergies CEO Patrick Pouyanne, who was interviewing Trump at the time of those comments, has since said that Europe should negotiate a free=trade guarantee on US LNG. However, he also warned that Europe should not “pass from a so-called over-dependence on Russia to an over-dependence on another country, even if it’s an ally.” 9
The question of China
The US would also have expected significant demand from China, the world’s largest energy importer, but that may now be threatened by Trump’s economic tariffs. At the start of February, he announced 10% tariffs on goods from China and as part of its response, China imposed tariffs of between 10 and 15% on US LNG, coal, crude oil and farm equipment. 10
China has become a larger US gas and oil importer in recent years and many of the planned US LNG export projects rely on China as a key buyer, according to Reuters. 11 Analyst responses, industry sources and company filings indicate that tariffs on LNG imports to China would be challenging. According to Reuters calculations; “Chinese state-owned companies have signed LNG supply deals for over 20 million metric tonnes per annum (MTPA) from both existing and future US export terminals.”
Charlie Riedl, executive director of the centre for LNG, a trade group representing US LNG exporters and developers, told Reuters: “These tariffs on US LNG directly undermine the Trump administration’s efforts to expand American energy exports and strengthen our geopolitical influence.”
Both Canada and Mexico, which were also threatened with tariffs by the Trump administration, were able to secure delays within days by entering into negotiations. This indicates that both the imposition and the retraction of tariffs are a fluid prospect, although the messaging on tariffs against China has been more consistent.
For the LNG market, US policy makes for another volatile factor in price prediction, adding to the energy transition and climate policy worldwide, uncertain weather conditions and the charged geopolitical conditions.
