Some U.S. LNG exporters are seeking to raise their delivery prices during contract renegotiations with buyers, as rising costs have made LNG projects less profitable in recent years, according to Reuters, citing sources familiar with the matter.
Energy Transfer, which is converting its Lake Charles LNG import facility in Louisiana into an export facility, has already begun renegotiations, company officials said during the Q4 earnings call last month.
Energy Transfer is revisiting sales and purchase agreements (SPAs) from 2019 and 2020, co-CEO Marshal McCrea confirmed.
“We are not happy with those prices. So, we are renegotiating them,” McCrea told analysts, referencing the updated cost levels and the prices set in the 2019-2020 agreements.
“We are negotiating with every one of them. To my knowledge, none have backed out so far. Everyone understands the increase in costs,” McCrea added.
Other LNG developers and exporters are also working to renegotiate contract prices with buyers, driven by rising construction, liquefaction, and labor costs in recent years. These increased expenses have made new projects more costly than originally planned.
Venture Global has been trying to negotiate higher prices for its CP2 project in Louisiana, sources told Reuters. However, the U.S. developer has not yet made a final investment decision, and construction has not yet begun.
Mexico Pacific, whose main project is Saguaro Energía LNG on Mexico’s West Coast, which will market U.S. natural gas from the Permian to Asia, also wants to renegotiate with two Chinese buyers. Chinese industry sources told Reuters that the buyers have so far rejected the proposed price adjustments.
While the U.S. remains the world’s largest LNG exporter, analysts warn that higher costs could affect U.S. LNG’s competitiveness, especially as competing supplies are sometimes priced based on oil, which may lead to lower prices.
Related Topics:
- How Much is LNG in China? A Comprehensive Overview
- How Many LNG Ships Are There in the World in 2025? A Detailed Overview
- How LNG is Kept Cold on Ships