U.S. LNG production is on a clear growth pathway to the end of the decade. Production is expected to more than double by 2028, and the U.S. will easily keep its place as the world’s leading LNG exporter.

But globally, the picture of demand is muddled and becoming blurrier each day thanks to rapidly changing domestic and international politics, said Jason Feer, global manager of business intelligence for Poten & Partners.

Changes in the European theater could push more LNG to Asia, where potential new tariffs on China could cause disruptions in the market. Long term, however, the Asian market remains the most likely customer for future U.S. production.

“In the long run, this huge build out that we have going globally in North America and in Qatar, even if Europe maintains its level of LNG imports, those additional supplies will have to go to Asia,” Feer said. “We're looking at sort of a change in trade flows going forward.”

Feer was one of four panelists on a March 26 webinar hosted by Poten and Partners, an analytical firm for international energy markets. The talk focused on potential effects of ongoing global events.

For the short term, European markets are trying to determine how to deal with low levels of natural gas in storage, thanks to high usage during the winter. Ideally, EU countries need to buy aggressively over the spring and summer to refill and meet storage requirements.

However, the EU plans to give more flexibility to utilities and the amount of natural gas they store. At the same time, U.S. gas, LNG manufacturing and shipping prices are rising, making the importation of LNG less attractive. 

“If you were to inject LNG or gas into European storage right now, you basically wouldn't expect to make any money, and that's certainly going to discourage storage builds unless that market structure changes,” Feer said.

At the same time, ongoing peace talks regarding Russia-Ukraine could mean an eventual return of Russian gas to Europe. The situation is likely to leave some buyers delaying their decisions.

“Many importers are going to just wait to see what happens before making supply decisions with regard to the peace talks,” Feer said.

U.S. LNG companies may see a subsequent slowdown in long-term contracts, which are key to developing new LNG plants, Feer said. Usually, LNG manufacturers seek 15-year deals to show financial support for projects that can take billions of dollars to complete.

The slowdown has not yet appeared, he noted, as Delfin Midstream announced a 15-year deal with Berlin-based SEFE on the same day as the Poten webinar.

In the Pacific, the ongoing U.S. trade war with China could have some potential effects on the bourgeoning Asian natgas market.

The White House is considering fees on Chinese shippers and companies that have Chinese ships or operators in their fleets. The early estimate is that an LNG carrier from China would pay up to $1.5 million per port visit, Feer said.

“That could have a significant effect on shipping economics,” he said.

However, U.S. LNG remains attractive to Asian buyers, said Kit Wong, head of south Asia and Middle East business intelligence for Poten.

“There is uncertainty, especially with the tariffs, but I think overall with the Trump administration in place, there's been a real move amongst some Asian buyers to actively seek long-term supply,” Wong said. The Asian view of the U.S. is that the country provides a very flexible and attractive supply of LNG.

“If you look at the wider political framework and how things are moving, there is definitely a push for some countries to secure more U.S. LNG,” she said.

While European deals may drop, the U.S. will most likely see LNG long-term deals from several Asian-Pacific countries, such as Japan and India, Wong said.

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