Trade war could delay Gulf Coast LNG projects

President Donald Trump takes a tour of the Cameron LNG export facility May 14, 2019, in Hackberry in 2019. (The Associated Press/Evan Vucci)

Escalating trade tensions with China could jeopardize or delay proposed liquefied natural gas projects on the Gulf Coast by raising construction costs in the United States and prices in China, hurting the emerging industry’s competitiveness in one of the world’s biggest energy markets, analysts and economists tell The Houston Chronicle.

China’s decision to impose 25% tariffs on U.S. LNG comes as developers are poised to make final investment decisions for several Gulf Coast projects, including Driftwood LNG near Lake Charles, La., and Calcasieu Pass LNG in Cameron Parish. Cheniere Energy of Houston also is nearing a final investment decision on an expansion of its Sabine Pass complex in Louisiana.

The trade war adds uncertainty into long-term planning for energy projects, said Peter Rodriguez, dean of the Jesse H. Jones Graduate School of Business at Rice University.

“If you were thinking this escalating trade war is bad for growth—then you have to think your future scenarios for energy prices look a little darker than before the weekend,” Rodriguez said. “It’s terrible news for LNG projects under way—not that they won’t finish, but I think their expectation is this is going to harm prices.”

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