The U.S. Plan to Increase U.S. LNG Supplies to Europe Isn’t a Long-Term Solution

The United States’ plan to increase liquefied natural gas, or LNG, supplies to Europe is flawed because it only addresses flows, not increasing U.S. LNG capacity. We see the efforts primarily focused on shifting spot market flows to Europe as allowed under existing U.S. contracts instead of making any material changes to the overall market. Efforts to expedite an increase in U.S. capacity have yet to be addressed from a regulatory or market standpoint, as the next major LNG capacity expansion is expected in 2024. Cheniere’s Corpus Christi Stage III, where we expect a final investment decision this summer and is already in our model, is expected online in 2027. If Cheniere were to pursue an incremental LNG expansion beyond Stage III, it would be 2029 or 2030 before it entered service. We think nearly all U.S. LNG suppliers are faced with a similar situation. Our wide moat rating and fair value estimate remain unchanged for the Cheniere entities.