Trump Presidency, Retreat from Climate Goals, and Power Shortages Will Drive Global Growth in LNG Contracts

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The high initial cost of LNG terminals necessitates a unique business model where developers secure long-term customer contracts before construction begins to obtain bank financing. These contracts are vital to the LNG industry. Government policies on terminal licensing affect both the contracts and the terminals' future.

In 2024, the global LNG industry saw a steady stream of long-term Sales and Purchase Agreements (SPAs), though the total volume was less than in 2023. This trend underscores the sustained demand for LNG and buyers' confidence in securing a reliable supply for economic growth and energy security. The long duration and large volume of these agreements signal a strong, stable market across regions.

Long-term LNG contracts (6-20 years) totaled 51.3 million tons per annum (mtpa) in 2024—significant, yet below 2023's 60.5 mtpa and 2022's record 80.5 mtpa as shown in Figure (1). This drop in 2024 stems from the Biden administration’s January 2024 halt on new LNG export approvals, prompted by climate activists, to assess economic and environmental impacts. This has raised concerns about future LNG supply from proposed U.S. projects awaiting approval. In addition, Lower economic growth in Europe and China, along with Japan's switch back to nuclear, prompted companies to reassess LNG's future.