US gas exporters seek price hikes to cover rising costs

Higher inflation is affecting the entire economy, and large infrastructure projects are no exception. Rising costs to build and operate new liquefied natural gas (LNG) export terminals have already led several US exporters to reopen negotiations with customers over previously signed contracts. Expectations of a significant increase in US gas exports in the future are also having a major impact on gas prices in Europe.

Like other countries, the United States has faced relatively high inflation in recent years. Rising material and labor costs are therefore also weighing on the economics of new gas export terminal projects. According to Reuters, at least three major US LNG exporters are considering or have already begun discussions with their customers about possible price adjustments.

According to several sources cited by the news agency, Mexico Pacific and Venture Global are seeking to open negotiations. In the case of Energy Transfer, company representatives themselves mentioned ongoing discussions during a presentation of the company's financial results.

According to Reuters sources, Mexico Pacific is seeking to negotiate higher gas liquefaction fees with its Chinese buyers. Zhejiang Energy and Guangzhou Gas have so far rejected the new offer, according to the sources. The proposed fee increase is driven by rising costs, with the terminal contractor seeking a higher price than originally expected.

Venture Global, the second-largest LNG exporter in the United States, also appears to be seeking contract changes. According to two Reuters sources, the company is trying to negotiate better terms. Construction of its new CP2 terminal has not even begun yet.

Energy Transfer is taking similar steps as it builds a 16.5 million-tonne-per-year LNG export terminal in Louisiana. At a presentation of the company's financial results in February, its chief executive said it was renegotiating liquefaction fees with customers. The company is seeking to align higher construction costs with its LNG supply contracts.