New LNG Rule Tests U.S. Edge in Global Energy

A phased US policy requiring LNG exports on US-built ships raises cost, capacity, and competitiveness concerns

8 May 2025

A new US policy mandating that a rising share of liquefied natural gas exports be shipped on domestically built vessels has unsettled energy producers and global buyers alike. The phased rule, due to begin in 2029, will initially apply to 1 per cent of LNG exports and rise gradually to 15 per cent by 2047.

Intended to revive the nation’s shipbuilding industry, the measure has prompted warnings from oil and gas majors that it could strain supply chains and weaken the competitiveness of US exports. Mike Sommers, chief executive of the American Petroleum Institute, said the rule “still demands long-term shipyard expansion” and that without such investment “the industry risks higher costs, supply chain delays, and lost market share.”

US shipyards currently lack the infrastructure to construct the complex LNG carriers required for global trade. Analysts estimate that meeting even the early targets will require significant capital to modernise facilities, train workforces, and improve logistics systems. Failure to do so, they say, could divert buyers to exporters such as Qatar and Australia, which already have established fleets and lower shipping costs.

Supporters argue that the mandate will strengthen national security, create industrial jobs, and rebuild maritime capability. Yet even proponents concede that achieving the 15 per cent threshold will stretch existing capacity and depend on federal incentives to succeed.

Industry groups have urged closer cooperation between government and private operators to manage the transition. A Cheniere Energy executive called for “a measured, achievable pathway” to expand domestic shipbuilding while maintaining reliable supply to international markets.

Energy companies are expected to respond by increasing investment in digital logistics systems, shipyard partnerships, and long-term procurement strategies. As implementation approaches, the policy underscores the tension between Washington’s industrial ambitions and the realities of competing in a rapidly shifting global LNG market.