Liquefied natural gas projects in the US could become uncompetitive if domestic natural gas prices continue rising, the CEO of developer Fulcrum LNG, Jesus Bronchalo, said on Tuesday.
Speaking at a panel discussion at Rice University’s Baker Institute, Bronchalo said natural gas prices are likely to increase more in the US, already one of the most expensive places in the world to produce LNG.
“Henry Hub is going to get to the point where it becomes too expensive or you are not going to be too competitive,” Bronchalo added, referring to the US gas price benchmark.
While the US is one of the world’s highest-cost LNG producers, gas price dynamics there can offer a stability that is important to buyers, said Joshua Lubarsky, president of maritime firm Seapath Group, at the same conference.
The US is also changing the way in which domestic LNG projects are being financed, with increasing use of private equity backed by government-backed sovereign wealth funds, said Sempra Infrastructure’s general counsel, Julie Mayo.
Sempra’s own use of private equity funds for its expansion is an example of the new financing model for US LNG projects, outside of the traditional use of external loans, said Mayo.
Sempra is one of the largest US LNG exporters, with its Cameron LNG and Port Arthur facilities producing LNG or under development.
(Reporting by Curtis Williams; Editing by Marianna Parraga and Nia Williams)