As construction, labor, and borrowing costs continue to climb, several U.S. liquefied natural gas (LNG) producers are looking to renegotiate higher prices with buyers. While these price hikes may help companies cover escalating expenses, they also threaten the cost advantage that has made U.S. LNG a dominant force in global energy markets. This comes at a time when President Donald Trump is working to expand the industry, which is already the world’s largest LNG exporter.
Energy analysts warn that rising liquefaction costs, a tightening domestic gas market, and falling oil-indexed LNG prices from competitors could pose serious challenges for U.S. LNG’s competitiveness. Alex Munton, director of global gas and LNG research at Rapidan Energy Group, described the situation as a “double whammy” for the sector, as increasing costs collide with a more volatile pricing environment.
Companies Seek to Adjust Pricing Agreements
Among the companies pushing for revised contracts are Mexico Pacific, Venture Global, and Energy Transfer. According to sources, Mexico Pacific, which is developing a 15 million metric tonnes per annum (MTPA) LNG facility in Western Mexico, is in discussions with Chinese buyers Zhejiang Energy and Guangzhou Gas about increasing liquefaction fees. The company is facing higher-than-expected construction costs from U.S. engineering giant Bechtel, which has made the project significantly more expensive than originally planned.
So far, Zhejiang and Guangzhou have rejected Mexico Pacific’s proposal, and Guangzhou has even requested to reduce its offtake from 1 MTPA to 700,000 tons per year. Neither Chinese firm has publicly commented on the negotiations, and both Mexico Pacific and Bechtel declined to provide details on the exact price increases being sought.
Venture Global, the second-largest U.S. LNG exporter, is making a similar push with buyers for its CP2 project in Louisiana. Despite the fact that construction has not yet begun and financial backing is still pending, the company has signaled to investors that liquefaction fees could rise to over $4 per million British thermal units (MMBtu)—nearly double the current $2.25/MMBtu.
Energy Transfer, which is working on a 16.5 MTPA LNG export facility in Louisiana, also confirmed it is in the middle of renegotiating fees with buyers. Co-CEO Marshall McCrea noted that customers remain committed to the project despite the price hikes, as industry participants recognize that rising costs are a reality across the board.
Industry Costs Continue to Mount
While some companies are aggressively renegotiating pricing, Cheniere Energy, the largest U.S. LNG exporter, has opted to keep its fees unchanged. Cheniere’s decision is largely due to its inflation-linked pricing structure and the cost advantages of developing brownfield sites, which reduce overall expenses.
Meanwhile, Baker Hughes, a major equipment supplier for LNG developers, has acknowledged that while it has managed to control its own cost inflation, the broader industry is experiencing price hikes across engineering, procurement, and construction (EPC) firms. CEO Lorenzo Simonelli pointed to higher labor and material costs as key drivers behind the rising price of LNG infrastructure.
According to brokerage firm Poten and Partners, liquefaction fees for U.S. LNG projects are on track to exceed $2.50/MMBtu, driven by a tight labor market, construction inflation, and persistently high interest rates. Industry experts warn that if U.S. natural gas prices continue to rise or Brent crude oil prices drop, U.S. LNG could lose its cost advantage, making it less attractive in international markets.
As negotiations continue, the U.S. LNG sector is at a crossroads. While developers are looking to secure higher prices to keep projects financially viable, buyers may seek alternatives in lower-cost regions if the price gap grows too wide. The next few months will be critical in determining whether the U.S. LNG industry can maintain its competitive edge amid growing economic pressures.
