As Donald Trump gears up for a potential return to the White House, the landscape of the global gas market has shifted significantly since his last administration. His policies may further impact this vital sector.
In 2023, the United States emerged as the leading exporter of liquefied natural gas (LNG), a position it is expected to maintain. By the year 2030, the U.S. is projected to account for 24% of global LNG export capacity, based on existing and under-construction facilities.
Moreover, the European Union (EU) has notably increased its LNG imports, bringing in around 50 billion cubic meters more in 2023 compared to 2020, totaling approximately 130 billion cubic meters last year. Notably, the share of U.S. LNG in these imports has surged, doubling from 23% in 2020 to roughly 47% in 2023. This shift is largely due to European nations seeking to reduce their dependence on Russian gas following the country’s invasion of Ukraine.
However, actual imports decreased in 2024 due to lower gas demand and higher storage levels. A rebound is expected next year as the current transit agreement between Russia and Ukraine, which allows gas to flow into the EU, is set to expire.
Should Trump return to power, more U.S. LNG could enter the market after 2030. It’s anticipated that he may swiftly reverse the Biden administration’s controversial pause on LNG export licenses, facilitating the approval of liquefaction plants. Yet, the progression of these projects will depend on commercial interests and the ability to secure necessary contracts and funding.
Trump has been vocal about the risks of Europe relying too heavily on Russian gas, particularly targeting Germany, whom he previously urged to establish an LNG import terminal. He may push EU countries to form longer-term contracts with U.S. LNG exporters, although uncertainty surrounds future gas demand in Europe, complicated by climate change targets.
On the flip side, some of Trump’s planned policies could reduce U.S. LNG exports to Europe. His proposed tariffs on imports could negatively impact the European economy and, subsequently, energy demand. Additionally, U.S. energy firms are advocating for the removal of penalties related to methane leaks during production, a move that could lower the environmental appeal of U.S. LNG among European buyers. The EU is set to enforce new methane regulations starting in 2025 that will also affect fossil fuel imports.
Some U.S. companies are keen to promote their lower-emission gas to Europe, making the extent of the new regulations crucial for the U.S. LNG industry.
The U.S.-EU LNG relationship faces significant uncertainties, particularly concerning the situation in Ukraine and the future of Russian gas exports. Trump has suggested pursuing a swift resolution to the conflict, which could reshape the dynamics of Russian gas flowing to the EU, especially into countries like Austria, Hungary, and Slovakia.
Another crucial aspect is whether Trump would uphold the current sanctions against Russia’s Arctic gas project. Lifting these sanctions could feature in any potential peace agreements.
Increasing U.S. LNG exports alongside less stringent clean energy policies might lead to higher domestic gas prices. Nevertheless, U.S. consumers prefer low gas prices, and steeply priced LNG may struggle to compete, particularly in price-sensitive Asian markets. Thus, a politically savvy approach may be necessary.