Middle East supply disruptions and record-low European storage levels have driven international natural gas benchmarks to multi-year highs. While long-term contracts insulate North American exporters from spot volatility, persistent global deficits are providing the commercial incentive necessary to accelerate a historic capacity expansion. With total U.S. liquefied natural gas (LNG) export capacity already on track to roughly double by 2031, a global preference for North American LNG supply is driving further investment in natural gas infrastructure across the continent.
Key Takeaways
- Middle East supply disruptions and low European storage have pushed global natural gas prices to multi-year highs.
- With U.S. LNG export capacity already expected to double in the next five years, the current macro landscape is fueling further expansion of North American LNG capacity.
- New export terminals are advancing rapidly across the U.S., Canada, and Mexico. Several major projects expect to begin construction this year.
International Natural Gas Benchmarks Surge Amid Geopolitical Shocks & Storage Deficits
Late last year, ample U.S. supply and tight margins briefly pushed profitability for spot LNG exports below the standard fixed liquefaction fee of $2–3 per million British thermal unit. However, LNG fundamentals quickly changed in March. The sudden outbreak of conflict in the Middle East and the effective closure of the Strait of Hormuz cut off roughly 20% of global LNG trade. Compounding this, Iranian strikes caused significant damage to Qatari LNG export terminals, potentially curbing their output for three to five years.
While the oil market has found limited relief through alternative pipelines and overland trucking routes that bypass the strait, LNG requires specialized infrastructure that leaves it essentially trapped. LNG tanker traffic through the Strait of Hormuz has virtually halted, forcing QatarEnergy to repeatedly extend its force majeure declarations, which legally shield the company from penalties as it remains unable to fulfill its contracted deliveries.
Europe is heading toward the winter heating season with its natural gas inventories at 15-year lows, as the region expected that the Iran war would end quickly and prices would drop once shipments resumed. Most European gas buyers delayed their usual summer restocking.
Storage levels remain well below the 80% threshold mandated by the European Commission for November. European importers are now being forced into a bidding war with Asian buyers for spot LNG cargoes to secure necessary volumes. (Asian countries are also turning to coal, with the VettaFi Global Coal Index (COALX) up 20.8% from July 17 through September 10.) As the chart below illustrates, this supply shortage has pushed the premiums of global LNG markers over the U.S. Henry Hub benchmark to their highest levels since early 2023.
Higher international benchmark prices reinforce the strategic value of North American LNG exports. While long-term fixed-fee contracts limit exposure to spot prices for most LNG exporters, higher international premiums have strengthened earnings on their remaining uncontracted capacity and provided strong commercial backing for a new wave of U.S. LNG export capacity expansions.
Long-Term Contracts Underpin a Doubling of U.S. LNG Capacity
LNG exports are expected to be the largest driver of incremental U.S. natural gas demand over the next few years. As shown in the chart below, total U.S. peak nameplate export capacity is on track to roughly double over the next five years based on projects under construction, growing from 18.7 billion cubic feet per day (Bcf/d) today to 37.4 Bcf/d by 2031. To put this growth into perspective, the U.S. consumed 91.9 Bcf/d of natural gas in 2025.
Operating export terminals and projects under construction are mostly contracted through long-term agreements, often stretching to 20 years. However, incremental cargoes from recently completed expansions have driven spot price upside for Cheniere Energy (LNG) and Venture Global (VG).
For instance, Cheniere targets having roughly 90% of its portfolio contracted on a long-term basis, but the company is now fully contracted for 2026, with less than 2% of its near-term production capacity left unsold. VG, though historically more exposed to the spot market via commissioning cargoes, has aggressively shifted its strategy this year. By the end of the second quarter, the company had locked in 91% of its available 2026 cargoes, leaving only about 9% exposed to current spot prices.
The long-term, firm commercial commitments that are hallmarks of LNG export projects are necessary for underwriting new construction projects. So far in 2026, three major U.S. projects have been sanctioned: VG’s 1.1 Bcf/d CP2 LNG Phase 2 in March, Caturus Energy’s 1.3 Bcf/d Commonwealth LNG in May, and Delfin Midstream’s 0.6 Bcf/d Delfin FLNG 1 in June. Incremental LNG export capacity requires natural gas infrastructure from the wellhead to the export terminal to supply these facilities.
Previewing Near-Term FIDs Across North American Export Terminals
Since the conflict began, European and Asian buyers have moved aggressively to secure reliable alternatives to Middle Eastern supply, driving a new wave of long-term sales and purchase agreements (SPAs) with North American LNG exporters, supporting the development of proposed export terminals.
U.S. developers are currently advancing projects totaling ~6.4 Bcf/d of export capacity, after signing 5.2 Bcf/d of long-term agreements last year. While established players like Cheniere and VG are pursuing capital-efficient bolt-on expansions at existing terminals, independent operators are advancing offshore floating LNG (FLNG) and greenfield facilities. In the near term, Glenfarne Energy Transition’s 0.5 Bcf/d Texas LNG and Delfin Midstream’s 0.6 Bcf/d Delfin FLNG 2 are leading the pipeline, with both expected to reach Final Investment Decision (FID), the formal decision to proceed with construction, by the end of 2026.
Beyond the U.S. Gulf Coast, export capacity is also advancing across Canada and Mexico. In Canada, the 1.6 Bcf/d Ksi Lisims LNG project and the 1.8 Bcf/d LNG Canada Phase 2 expansion are both targeting FIDs by year-end, bolstered by government support. Meanwhile, in Mexico, the 1.1 Bcf/d Amigo LNG project is also positioning to reach FID before the end of the year.
Ways to Gain Exposure
LNG exports are set to remain the primary driver of incremental U.S. natural gas demand over the coming years. Capitalizing on this growth requires extensive midstream infrastructure to gather natural gas, process it, and transport it to LNG facilities.
For investors looking to capitalize on rising natural gas demand, energy infrastructure companies offer a compelling option. The Alerian Midstream Energy Select Index (AMEI) includes Cheniere, VG, and NextDecade (NEXT), which is building its first LNG export facility. AMEI mostly consists of U.S. and Canadian midstream corporations, including names like Enbridge (ENB:TSE), Kinder Morgan (KMI), and Pembina (PPL:TSE) that have interests in LNG export facilities. The index includes a 25% weighting to MLPs.
Approximately 70% of AMEI by weighting primarily focuses on natural gas infrastructure as of September 10, while LNG pure plays had a combined weight of 8.6%. Energy infrastructure also tends to offer attractive yields, which can be appealing when playing a long-term theme like growing natural gas demand. AMEI was yielding 4.5% as of September 10.
Looking for midstream insights in your inbox? Subscribe here to keep a pulse on midstream investing through our weekly updates.
AMEI is the underlying index for the Alerian Energy Infrastructure ETF (ENFR) and the Alerian Energy Infrastructure Portfolio (ALEFX). COALX is the underlying index for the Range Global Coal Index ETF (COAL).
Related Research:
Midstream Scales Up Natural Gas Infrastructure
Revisiting Energy Market Impacts From the Iran War
U.S. LNG Exports Surge Despite 4Q25 Headwinds
Inside Venture Global’s LNG Strategy
Sizing Up the Next Wave of U.S. LNG Export Projects
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for ENFR, ALEFX, and COAL, for which it receives an index licensing fee. However, ENFR, ALEFX, and COAL are not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing or trading of ENFR, ALEFX, and COAL.
For more news, information, and analysis, visit the Energy Infrastructure Content Hub.
