博彩对冲

The uncertainty over US President Donald Trump鈥檚 global trade war and erratic tariff policies are stirring concerns in his country鈥檚 domestic natural gas and LNG industry.

The measures are potentially elevating costs for companies and reducing the competitiveness of US LNG exports at a time when liquefaction projects still need to clinch offtake deals to reach a final investment decision (FID), experts say.

Washington鈥檚 widespread tariffs on most of its global trading partners has led to some countries, particularly in Asia, to come to the table to pledge buying US LNG volumes in return for reducing or eliminating the global trade barriers.

China, the world鈥檚 largest LNG importer in 2024, has avoided this strategy, retaliating by imposing 125% tariffs on US goods. China is reportedly considering lifting import tariffs on US ethane, but not LPG, crude oil or LNG.

Project Financing Risks

The tariffs can complicate or delay investment decisions on US LNG projects that are dependent on commercial commitments by heaping on a new set of lending requirements to offset the uncertainty caused by already rising costs and increased supply competition.

Even before the tariff war erupted, US LNG project developers were already seeking renegotiations of fixed liquefaction fees which were agreed with buyers in 2022-23, in some cases required by lenders to cover higher project costs. These agreements have likely lapsed and need to be renewed.

鈥淧roject developments best able to avoid the need for commercial commitments to achieve financing have an advantage in this environment,鈥� says Ian Nathan, the director of Gas and LNG Research with 博彩对冲鈥檚 Research & Advisory unit. 鈥淪till, this shifting trade environment could be what the industry needs to ease overdevelopment as it embarks on a period of abundance."

The tariff situation creates more uncertainty and makes it more difficult for the developers and buyers to reach a quick resolution on any renegotiation of the fees, according to David Phua, a Singapore-based partner with law firm King & Wood Mallesons.

"For fixed fees and in absence of any provision entitling a party to reopen contract pricing, it would be entirely within the buyers鈥� rights to refuse a proposal to renegotiate for higher fees," Phua says. "Assuming that the project economics cannot be sufficiently underpinned by the existing fee structure and that FID is a condition precedent under the SPA [sales and purchase agreement] (which is not uncommon for SPAs supplying from greenfield projects), the contract would likely lapse in accordance with its terms ... leading to the project becoming uncommercial and ultimately unable to reach FID."

US LNG terminal costs have already shot up 30% over the past several years, partially from steel tariffs imposed during the first Trump administration, according to analysts from investment bank Stifel.

鈥淪hould tariffs stick and drive costs up 10%-plus, we would expect to see tolling fees increase from the $2.50-$3.00 per million Btu range today to account for that higher inflation,鈥� Stifel analysts said in an Apr. 3 note.

Meanwhile, the port fees on Chinese-built and -operated ships could also hurt US competitiveness as an LNG exporter. Per the US Trade Representative policy finalized last week, 1% of all US LNG exported annually will be required to travel on US-built vessels by 2030, with that percentage rising to 15% by 2047.

鈥淧utting that LNG on US built ships will increase the price 鈥� but it will probably be some time before anyone can even provide the cost estimate for a US ship,鈥� says an Asia-based industry advisor who previously worked for an Asian LNG importer.

鈥淐hina will continue to leverage its position to promote its shipbuilding industry. The US may well have shot itself in the foot by alienating the one buyer who could underpin their continued dominance as an LNG exporter,鈥� he adds.

Domestic Risks

Closer to home, the import tariffs are expected to hit an upstream oil and gas industry that was already struggling to cope with rising inflationary, supply chain and labor challenges.

The full effects of the tariffs are yet to be seen, but US oil and gas executives have already expressed concerns that the uncertainty would hit an industry that was recovering from the Covid-19 economic blow and was optimistic on Trump鈥檚 potential regulatory boost to hydrocarbon production.

Washington鈥檚 Feb. 10 levy of a 25% tariff on imported steel and aluminum from all US trading partners, in particular, is set to push up costs across the gas and LNG sector, as US-based manufacturers of much-needed construction material such as tubing increased prices ahead of the tariffs. The US imports about one-third of its steel, largely from Canada and Mexico, and around half of its aluminum, mostly from Canada.

鈥淸H]igher steel tariffs may result in fewer wells completed due to higher completion costs, and, in particular, the cost of 鈥� tubular goods,鈥� according to one executive quoted in the Federal Reserve Bank of Dallas survey of 130 E&P and drilling services firms released in March. 鈥淭he margins are thin enough for many wells, and this will likely result in downward pressure on total wells brought on line.鈥�

Another surveyed executive said the tariffs pushed casing and tubing costs up by 25%.

Consultancy Rystad Energy estimates the US oil and gas sector鈥檚 overall construction costs to rise as much as 15% as a result.