LNG Econ 101: Rising Supply Could Dent Profits, Hurt Some Projects

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)

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Summary

Global construction of liquefied natural gas (LNG) terminals is set to accelerate sharply, leading some to ask if the current boom means a bust is coming.

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Global LNG Buildout: Strong, But for How Long?

The global liquefied natural gas (LNG) buildout began in earnest about decade ago. Over the 2010-2019 period, terminals totaling nearly 300 billion cubic meters (Bcm) of gas processing capacity began operating, according to the "World Energy Outlook 2025" ("WEO 2025") report from the International Energy Agency (IEA) (Paris, France). That works out to about 10.6 trillion cubic feet (Tcf) of processing capacity.

The surge in construction roughly doubled global LNG export terminal capacity, to about 600 Bcm at yearend 2025, "WEO 2025" said.

Click on the image at right to see a projection of global LNG terminal capacity to 2035.

Worldwide LNG demand reached about 560 Bcm in 2024, the report added. Currently, LNG markets are roughly in equilibrium, where demand and supply are more or less in balance.

Strong global demand for LNG has kept markets in equilibrium. One major source of new demand has been Europe, which ramped up its imports of LNG following Russia's invasion of Ukraine in February 2022, after which Russian gas exports were sanctioned. In the first months after that invasion, many LNG cargoes originally destined for Asia were redirected to Europe.

Over the prior decade, the world's appetite for LNG more or less rose in tandem with the expansion of LNG export capacity. But can it continue grow fast enough to absorb a further 50% increase in capacity, to 900 Bcm by 2035?

U.S. Leading the LNG Buildout

More than half of the expected LNG capacity additions over the next decade are scheduled to be built in the U.S., the IEA said. "The U.S. has driven global liquefaction capacity growth for the past decade and it is set to expand its capacity by a further 160 Bcm to 2035," the energy agency said in its report.

Eight LNG export terminals currently are operating in the U.S. The Trump administration plans to rapidly expand export capacity, reversing a pause imposed by his predecessor.

According to the Federal Energy Regulatory Commission (FERC), nearly 22 billion cubic feet per day (Bcf/d) of export capacity is fully permitted and under construction, including:

• Sabine Pass, Texas (2.57 billion cubic feet of gas per day [Bcf/d])
• Plaquemines Parish, Louisiana (3.76 Bcf/d)
• Calcasieu Parish, Louisiana: (3.81 Bcf/d)
• Corpus Christi, Texas (2.06 Bcf/d)
• Port Arthur, Texas (1.86 Bcf/d)
• Brownsville, Texas (3.73 Bcf/d)
• Elba Island, Georgia (0.06 Bcf/d)
• Cameron Parish, Louisiana (3.96 Bcf/d)

FERC has approved a number of other projects, with total export capacity of approximately 13.24 Bcf/d, but they have not yet begun construction. These projects include:

• Magnolia LNG, Lake Charles, Louisiana (1.22 Bcf/d)
• Cameron LNG Train 4, Hackberry, Louisiana (0.93 Bcf/d)
• Freeport LNG Train 4, Freeport, Texas (0.74 Bcf/d)
• Gulf LNG Liquefaction, Pascagoula, Mississippi (1.50 Bcf/d)
• Jacksonville LNG, Jacksonville, Florida (0.13 Bcf/d)
• Texas LNG Brownsville, Brownsville, Texas (0.62 Bcf/d)
• Alaska LNG, Nikiski, Alaska (2.76 Bcf/d)
• Commonwealth LNG, Cameron Parish, Louisiana (1.21 Bcf/d)
• Port Arthur LNG Trains 3 & 4, Port Arthur, Texas (1.86 Bcf/d)

This list also includes Lake Charles LNG, Louisiana (1.22 Bcf/d), but on Thursday, project developer Energy Transfer (Dallas, Texas) said it was suspending its work on the project in order to focus on its natural gas pipeline projects. For more on that, see December 19, 2025, article - Lake Charles LNG Suspended.

By 2030, U.S. LNG export capacity is scheduled to roughly double, to 30 Bcf/d from about 14 Bcf/d in 2025. After 2030, U.S. export capacity is expected to rise, albeit at a slower pace.

Click on the image at right to see a graphic depicting in-service dates of planned U.S. LNG export terminals.

In its most recent "Short-Term Energy Outlook," released December 9, the U.S. Energy Information Administration (EIA) predicted U.S. LNG exports will rise from approximately 11.9 Bcf/d in 2024 to 14.9 Bcf/d in 2025 and 16.3 Bcf/d in 2026.

Cautions Emerge About LNG Overbuild

While the Trump administration continues to aggressively push LNG terminal development, part of its "energy dominance" agenda, some industry participants are raising concerns about a potential global overbuild.

The IEA raised those concerns in a recent report on LNG. For more on that, see October 29, 2025, article - IEA Expecting LNG Supply Glut Beyond 2030.

Count LNG pioneer Cheniere Energy Incorporated (Houston, Texas) as another member of the skeptical camp. In a recent talk at a Federal Reserve Bank conference on energy and the economy, Anatol Feygin, Cheniere's executive vice president and chief commercial officer, has his doubts whether all the planned LNG export capacity will materialize as planned.

"Most U.S. LNG terminals in which a financial investment decision (FID) was made this year do not have signed (offtake) contracts," he said November 14. "Most of the projects that signed an FID (final investment decision) this year did so in part to avoid having to renegotiate engineering, procurement and construction (EPC) contracts," where terms were expected to be less favorable given ongoing delays and cost increases for turbines, steel and other inputs.

"There will be some shakeout," he continued. "Markets will do what markets do." Some of Cheniere's competitors are assuming a $5 per thousand cubic feet (Mcf) netback over Henry Hub prices for natural gas, he said, while Cheniere has a far less aggressive outlook, about $2.50 per Mcf netback.

Higher netback assumptions mean higher landed prices, which could undercut the economic argument for LNG to displace coal- or oil-fired electric generation. Asian prices for LNG are hovering around $10 per Mcf, down sharply from mid-2025, when they approached $15 per Mcf.

Feygin said Cheniere is expecting LNG prices to fall further, to the high single digits.

If LNG prices stay soft or get softer, the proposed terminals that are most at risk, Feygin continued, are merchant firms "who seem to want to play the market when their gas is on the water." In essence, replicating what happened after the Russian invasion of Ukraine. As the LNG buildout continues, he said, there will be a "flight to quality," as market participants opt to do business with more established firms.

Jesus Davis, Industrial Info's vice president of energy services, also is skeptical that all the proposed LNG terminals will be built, either here or in other markets. "We track bona fide LNG projects that companies have committed to build, but we never assume that all of them will begin construction and start operation according to their timelines."

He declined to say which projects were most at risk for getting delayed or cancelled, though he was sure not all of the planned projects would get built.

"The economic argument for LNG is very sensitive to industrial and power demand as well as the competing costs of fuels," he said. "Price declines for LNG could lead to expanded demand overseas, which could mean more business for existing terminals as well as a greater probability that more of the proposed facilities will be built. But declining LNG prices could also cut into expected profits and undercut the economic rationale for building some of those terminals."

Key Takeaways

• The global LNG market, which doubled in size over the 2015-2024 period, is set to grow by an additional 50% by 2035.
• Over 50% of the planned export terminal capacity additions are scheduled to be built in the U.S.
• Global LNG supply and demand currently are in equilibrium, but some observers are questioning whether that will remain, given the sharp increase in planned construction of LNG export terminals.
• A significant increase in LNG export terminal capacity could drive down LNG prices, which could lead to increased demand while also undercutting the financial assumptions on which some of those terminals were built.

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