The current administration has been quick to roll out export licences, but the steel tariffs might throw a wrench in its plans, writes Tray Swanson
US president Donald Trump's administration has swiftly shored up the country's LNG industry, most prominently by doling out export licences to proposed terminals. But while cutting regulatory hurdles signals policy stability and helps projects on the cusp of final investment decisions (FIDs) gain momentum in commercial negotiations, Trump's unwavering commitment to steel tariffs adds a layer of uncertainty for developers looking to spend billions on new projects.
Political backing from the new administration and regulatory streamlining helped bring momentum to commercial talks. Since January, US LNG producers have signed or finalised offtake agreements totalling 10.7mn t/yr, including non-binding deals.Five LNG projects received a non-free trade agreement (FTA) permit or permit extension since January, which could make their projects more appealing in commercial talks with banks and potential offtakers. Four of them expect to reach FIDs this year.
In February, Trump's Department of Energy (DOE) swiftly ended the Biden administration's year-long pause on issuing licences to export to non-FTA countries. Although the first two new licences were conditional, the DOE issued a final order for Sempra's 13.5mn t/yr Port Arthur phase 2 project on 29 May, shortly after the DOE concluded its 2024 LNG export study that was commissioned by the Biden administration to assess the impact of increased LNG exports on "the public interest". Trump's DOE found that higher exports indeed are in the public interest and hailed "a return to regular order on LNG exports". Alongside Port Arthur, Kimmeridge's 9.5mn t/yr Commonwealth LNG, Delfin's 13.2mn t/yr floating LNG terminal and Venture Global's 28mn t/yr CP2 plant have also received export approvals or extensions and are anticipated to reach FID later this year.
Several other legislative measures being discussed in the Republican-dominated Congress seek to eliminate regulatory delays to LNG projects. The so-called "big, beautiful bill" includes an add-on that would automatically grant non-FTA export licences to developers that pay a $1mn fee, considering the payment to be in the public interest. One bill proposed in the Senate seeks to prevent federal courts from vacating permits that are already issued to LNG facilities, a measure that would safeguard projects from the judicial setbacks that NextDecade's Rio Grande LNG and Glenfarne's Texas LNG faced last year. And the House Energy Subcommittee on Energy will soon discuss the 1948 bill, which would eliminate altogether the requirement for DOE authorisation to export LNG, placing sole authority over LNG approvals with the Federal Energy Regulatory Commission.
Steely determination
But not all of Trump's policies have found a receptive audience in the LNG sector. His insistence on levying tariffs on steel and aluminium, key building materials for LNG projects, might force companies to adjust their spending plans. Unlike the reciprocal tariffs placed, revoked and still threatened on most countries, Trump has not dithered on the metals tariffs since enacting them in March. Instead, he doubled steel and aluminum duties to 50pc on 4 June — a move that, barring an exemption for industry, threatens to inflate project costs.
The US Trade Representative has partly back-tracked on its proposal to require 1pc of US LNG exports be loaded on US-flagged, built and operated ships from 2028 — by shifting the duty to comply from plant operators, which under the original plan faced the threat of having their export licences revoked, to shippers. This came after the industry had criticised the measure for being hard to reconcile with the prevailing fob nature of US LNG contracts. Yet it remains difficult to envisage how even the amended proposal could work in practice.
