News
19/05/25
US LNG developers brush off tariff concerns
Houston, 19 May (Argus) — The US' biggest LNG developers have little worry over
potential costs from President Donald Trump's 25pc steel and aluminum import
tariffs as they prepare to spend billions building new export infrastructure.
The top exporters of US LNG so far in 2025 — Cheniere, Venture Global and Sempra
— are pushing ahead with plans for new terminals and expansions, dismissing
concerns that Trump's protectionist trade policy could throttle projects that
would help add more than 80mn t/yr (12bn cf/d) of capacity to the world's
largest supplier of LNG by 2030. Sempra and Venture Global both estimate that
just 1pc of capital expenditure for the first phases of their respective Port
Arthur and CP2 projects is exposed to tariffs. Sempra plans to spend $13bn on
the 13.5mn t/yr first phase of the Port Arthur, Texas, project. Venture Global
expects to spend $27bn-28bn on both phases of the 28mn t/yr CP2 plant in
Louisiana, but has yet to reach a final investment decision for phase 1. About
90pc of the Port Arthur project's spending is with domestic suppliers and
contractors, Sempra chief executive Jeffrey Martin told investors in an earnings
call on 8 May, with steel for the first liquefaction train fully sourced in the
US. The two-train first phase is expected to have its trains on line in 2027 and
2028. Disruptions during the Covid-19 pandemic had already forced the company to
identify and adapt to risks in the supply chain. "We expect those diversified
sources to help us better manage and mitigate tariff risks," Sempra chief
financial officer Karen Sedgwick said. She later added that the firm
preemptively began importing materials for Port Arthur LNG into a foreign trade
zone in February, a tactic that can reduce or delay duties payments . Neither of
Venture Global's existing 12.4mn t/yr Calcasieu Pass and 27.2mn t/yr Plaquemines
plants in Louisiana faces tariff risks, chief executive Mike Sabel told
investors on 13 May. But up to $350mn of materials in the 20.2mn t/yr first
phase of CP2 are subject to duties. The 26 prefabricated trains in phase 1 are
being built in Italy and represent the largest exposure (see table) . Venture
Global expects 12 of those trains to arrive in Louisiana by the end of the year.
Inflation and high interest rates represent a bigger threat, Sabel said, calling
it "probably the toughest environment to build our projects since the 1970s".
"It's something we work and live every day because of the scale of construction
we're doing," said Sabel, whose company has 73.8mn t/yr of capacity in
development. Sempra expects to make a final investment decision on the 13.5mn
t/yr second phase of Port Arthur LNG by the end of 2025. Venture Global is
eyeing a decision on CP2's first phase by mid-2025. ‘Our best salesmen for US
LNG' Cheniere, the largest LNG exporter in the US, faces no tariff risks at its
11.45mn t/yr Corpus Christi, Texas, stage 3 expansion. The seven-train project
"is basically complete", chief executive Jack Fusco told investors on 8 May,
with all materials on site and construction ongoing. The company expects to have
the first four trains producing LNG by the end of the year and plans to reach an
investment decision this year to add trains 8 and 9. The largest portion of
spending for those trains will be on labor, and "a fair amount" of equipment and
materials will be sourced domestically, limiting tariff exposure, Fusco said.
The company has already spent $500mn in early procurement. Cheniere also plans
to jump on what it sees as a friendly permitting window under the Trump
administration and add about 17mn t/yr to its existing 33mn t/yr Sabine Pass
plant in Louisiana. Fusco said he has been meeting with administration officials
in Washington to discuss trade issues and how LNG fits in Trump's energy agenda.
The first Trump administration "were some of our best salesmen for US LNG, and
that's continued during the president's current administration", Fusco said.
Since taking office in January, Trump's administration has worked to buttress
the US LNG industry, quickly ending the Biden administration's pause on issuing
licenses to export to countries that do not have free trade agreements with the
US and making it easier for projects to receive extensions for such licenses.
But the new projects by Cheniere, Venture Global and Sempra may benefit from
having already been in at least preliminary development when Trump unveiled the
metals tariffs in February. For developers in earlier phases who are just now
procuring supplies, "it's a different story", Alex Whittington, director of
international affairs at Cheniere, told a conference in April. By Tray Swanson
Venture Global CP2 Phase 1 - Tariff Exposure Component Country of Origin
Delivery Status Tariff Exposure Liquefaction trains Italy First module delivery
in mid-2025 $145mn-255mn Pre-treatment modules Fabricated in US First module
delivery in mid-2026 $10mn-20mn Power island components US, Europe, Vietnam
Delivered, major equipment in US storage $3mn-5mn Piperack modules, structural
steel and pipe Various Piperack and structural steel procured $6mn-10mn Balance
of plant Various Major bulk materials procured $40mn-50mn LNG tanks Various 9pc
nickel steel plate and pipe piles procured $6mn-10mn Total $210mn-350mn —
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