S&P Global — 6 February 2025
Daily Update: February 6, 2025
LNG Faces Additional Hurdles Despite Trump Support
By Nathan Hunt
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On his first day back in the Oval Office, US President Donald Trump signed an executive order instructing the government to resume processing export permit applications for new LNG projects. This order supersedes a decision by former President Joe Biden to pause new export permits pending additional environmental review. While the resumption of permits was hailed by the industry, the further growth of demand for US LNG is not as simple as “build it and they will come.” Structural factors in LNG markets mean that it will continue to expand modestly each year, and final investment decisions (FIDs) depend on various factors. Gas market experts from S&P Global recently joined the “EnergyCents” podcast to discuss the top trends that will shape global gas markets in 2025.
“Getting authorization is not all you need to take FID,” said Laurent Ruseckas, executive director of research and analysis at S&P Global Commodity Insights. “You need sales contracts — firm sales contracts in place with buyers. Some of those projects are in very good position in terms of contracting. Others still have some more contracting work to do. So that’s one of the other obstacles.”
These permit approvals affect about 100 million metric tons per year of US LNG. However, experts at S&P Global Commodity Insights do not foresee global demand for that much additional LNG soon. Other projects are coming online around the world, and US LNG production growth will depend on offtakers’ willingness to take on additional capacity. Notably, even India, which is undergoing significant economic and energy demand growth, is expected to see only a modest rise in natural gas demand. LNG in particular requires considerable infrastructure investment, and these projects take years to complete, even when permits are approved.
There can also be further legal hurdles after permits are granted. For example, the Rio Grande LNG project in Texas had one of its permits challenged by the Sierra Club in court, which could put the project in limbo for a significant length of time. Developers of the Rio Grande LNG project have asked a US federal appeals court to reverse the ruling that tossed key approvals for the projects after Trump's executive orders undercut the basis of the original decision.
In addition, global demand for LNG has not grown universally. “European gas demand has structurally downshifted to a much lower level than it was before ... the price crisis in 2022,” Ruseckas said. “If you look at demand, this is for EU plus UK, 2021 gas demand was 477 billion cubic meters. This year just concluded, 2024, was 378 [Bcm].”
Trump has acted quickly to reverse many of the policies of his predecessor that he has stated led to higher energy prices. However, it may be years before additional capacity of US natural gas becomes available and even longer before consumers see a price difference driven by additional supply.
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