LNG Sector Raises Concerns Over Potential Impact of U.S. Shipbuilding Requirements on Energy Export Growth

By Lisa Baertlein and Jarrett Renshaw

Hey there! so, here’s the scoop: U.S. energy companies are reaching out to President Trump’s governance,asking for a break on a new rule that would require liquefied natural gas (LNG) tankers to be transported on ships built in the U.S. This move is part of a larger initiative aimed at boosting domestic shipbuilding.The United States currently leads the world in LNG exports, raking in about $34 billion each year. The Trump administration has been all about supporting this industry as part of its energy dominance strategy. However, things took an unexpected turn when the U.S. Trade Representative (USTR) announced on April 17 that starting April 2028,LNG producers must use U.S.-built vessels for at least 1% of thier exports—a figure that will rise to 15% by April 2047.

This requirement could put American LNG exporters at a disadvantage compared to their global counterparts since there simply aren’t enough ships made in the U.S. to meet these demands, according to a letter from the American Petroleum Institute (API) sent to Energy Secretary Chris Wright and Doug Burgum, who chairs the National Energy Dominance Council.

API’s CEO Mike Sommers expressed concerns that this regulation might undo some of the progress made under Trump’s leadership toward stabilizing and enhancing U.S. LNG production capabilities. API represents major players like Exxon mobil and Chevron.

Exporters who fail to comply with these new rules risk losing their licenses—an alarming prospect given they have limited control over how they can meet these requirements with vessels they don’t own or manage directly.

Sommers pointed out that while companies are working hard with both USTR and the Department of Energy for sensible policies benefiting consumers and promoting American energy strength, compliance seems nearly unfeasible under current conditions.

Interestingly enough, this rule is part of broader efforts by Washington aimed at countering China’s rising influence both commercially and militarily across international waters.

Currently, there are around 792 LNG carriers operating worldwide; most come from South Korea and Japan—703 combined! China is also making strides with plans for more than 100 new carriers but only has five from its own shipyards so far. In contrast, just five aging vessels were built in america back in the ’70s—and they’re not even active anymore!

According to shipping consultancy AXSMarine, South Korea remains king when it comes to building new carriers—with over 230 currently on order—while China’s ambitions continue growing rapidly as it seeks more market share.

Regrettably for American shipbuilders trying to keep up with demand before those deadlines hit—the Center for LNG stated there’s no way current yards can produce enough ships quickly enough; building one carrier could take up to five years!

To comply with even just that initial requirement would mean needing around five newly constructed ships by decade’s end—a tall order indeed! Sommers emphasized how unrealistic this timeline is given existing capacities within two capable shipyards available today.

Considering all this chaos surrounding regulations affecting crude oil imports/exports too—vehicle carrier operators are also hoping for some relief from hefty port fees imposed on foreign-built vessels recently announced alongside those other rules back in mid-April!

So stay tuned as we watch how these developments unfold—it’ll be fascinating times ahead!

(Reporting by Lisa Baertlein in Los Angeles; Jarrett Renshaw in Washington; additional reporting by Arathy somasekhar in Houston; Editing by Chizu Nomiyama)