US LNG Projects Advance Even as Global Prices Slump


  • A warm winter and mixed demand from Asia have weighed on global LNG prices in 2023 after a standout in 2022.
  • Despite the market weakness, a handful of US projects have either begun construction or are nearing the start of construction. This provides visibility to meaningful LNG export capacity growth in the US and opportunities for midstream.
  • Contracts to purchase LNG well into the 2040s reinforce a positive long-term view for US natural gas production and global LNG demand.

A warm winter and a sluggish global economy have put a damper on LNG prices in 2023. Despite a challenging landscape, US LNG export projects continue to see positive progress with multiple facilities starting construction this year. Today’s note discusses the weakness in LNG markets in 2023, US export projects under development, and the positive implications of growing US LNG export capacity.

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LNG prices slide in 2023.

Global LNG prices spiked in 2022 following Russia’s invasion of Ukraine as Europe scrambled to replace Russian volumes and fill up storage ahead of winter. The unexpected, extended outage at Freeport LNG’s Texas facility following a fire on June 8, 2022, also put upward pressure on prices. European LNG prices topped above $90 per million British thermal units (MMBtu) in August 2022. The Japan/Korea LNG price marker peaked near $70 per MMBtu.

As shown in the chart below, a warm winter quickly sent prices back to earth. In Europe, natural gas storage exiting winter was 55.7% full – a record high for March 31. Ample inventories mean less demand for refilling storage, which has put pressure on prices. In Asia, LNG demand trends have been mixed with Japan particularly weak. Cheniere (LNG) noted on its early May earnings call that Chinese LNG imports were down 3% in 1Q23 relative to 1Q22 but leading indicators for demand were encouraging.

Global LNG Prices have moderated in 2023