US LNG deal-making heats up in race to FID

With the export license pause lifted, a flurry of US LNG offtake deals are getting pushed through, writes Tray Swanson

US LNG projects on the cusp of final investment decisions (FIDs) have regained commercial momentum following the end of former president Joe Biden's pause on the granting of new export licences. This year's US LNG agreements have already eclipsed 2024's total, with the majority being signed with Asian companies.

Project developers have signed binding agreements for 15.95mn t/yr of US LNG this year so far, up from 10.5mn t/yr in all of last year — excluding non-binding agreements and volumes set aside for equity stakes (see table).

And sellers are confident in reaching new deals. US LNG operator Venture Global is optimistic it will sign more 20-year contracts this year ahead of a planned FID on the second phase of its 28mn t/yr CP2 plant in 2026, having reached an FID on the first phase in late July, chief executive Mike Sabel told investors on 13 August. Customers also hold at least 6.5mn t/yr of supply under initial agreements that could be finalised with projects aiming to reach an FID by the end of this year.

The recent contracting spree has been spurred on by the end of the Biden administration's pause on issuing licences to export to countries that do not have free trade agreements with the US (non-FTA), as well as a policy easing the process for receiving licence extensions. Of the binding offtake deals signed this year so far, 11.25mn t/yr were for projects that were delayed by last year's licensing pause and have either received non-FTA licences this year or expect to do so.

Japanese firms alone have signed up for 6.5mn t/yr, driven mostly by the need to secure new deals to replace expiring ones. Given the uncertainty over nuclear's role in Japan's future power mix and the evolution of demand, US LNG's flexibility may be particularly attractive. Qatari LNG deals are typically destination-restricted, but US LNG is sold on a destination-flexible basis, meaning customers can sell excess cargoes on the spot market.

Portfolio plays

US president Donald Trump's demands that other countries buy US LNG to avoid higher tariff rates will probably have little effect on where the molecules are actually consumed. Malaysian state-owned Petronas could buy $3.4bn/yr of US LNG to receive a more favourable tariff rate, trade and industry minister Zafrul Abdul Aziz says, although prime minister Anwar Ibrahim says the firm will only do this to meet demand or fulfil contract obligations, given the competitive price.

Petronas earlier this year agreed to offtake deals with the 9.5mn t/yr Commonwealth LNG terminal and Venture Global's 28mn t/yr CP2 facility, but this supply will contribute to the company's portfolio, meaning it can sell it on to markets with attractive premiums. Malaysia has taken no US LNG this year so far, and it imported only eight US cargoes in 2013-24, ship-tracking data from monitoring service Kpler show. And while the European Commission agreed to nearly triple its US energy purchases as part of its trade deal with the US, this target would be nearly impossible to achievefrom a technical point of view, even before considering that where US LNG ends up is down to global price signals rather than political promises.

Other portfolio players have also boosted US supply. France's TotalEnergies is already the largest exporter of US LNG, and it agreed in April to buy 1.5mn t/yr from US developer NextDecade's planned expansion at the 17.6mn t/yr Rio Grande LNG terminal. And Saudi Arabia's state-owned Aramco signed up for 1.2mn t/yr from the Rio Grande expansion as it develops a 20mn t/yr portfolio.

Meanwhile, several Asian countries such as Japan and South Korea have been considering investing in the planned 20mn t/yr Alaska LNG export project that Trump has publicly endorsed, although there have been no firm commitments.