On My Mind: LNG and Gas Industry Musings by Vivek Chandra

On My Mind: Episode 47: November 6 2025In this episode, two recent trends in the LNG industry arediscussed. The first is the increasing acceptance of cost overruns in project capital expenditure. Approximately a decade ago, as the US LNG export industry was developing, many projects targeted capex at $500/tonne or lower. Prior to this, some projects, such as Equatorial Guinea, achieved prices as low as$250/tonne. In recent years, however, announced capex figures have risen to $1500/tonne or higher for many projects across North America and other regions. Factors contributing to this change include rising labor costs, inflation, and higher steel prices. Cost overruns can have significant effects on hostgovernment tax revenues. For example, Australia experienced widespread project cost increases, resulting in minimal tax receipts over a decade of LNG production. In situations where the host government operates under a ProductionSharing Agreement, such as in Mozambique and other locations, cost overruns may be reimbursed by the host government, which can delay profitability and reduceearly tax income. The poorest people in the world will, in essence, pay for cost overruns of the largest companies of the world!   We all need to bring fiscal discipline back and control our costs.The second topic addressed is the development of FloatingLNG (FLNG) projects. Following the initial launch of Shell Prelude in Australia less than ten years ago, FLNG was considered a relatively new and expensive technology. Subsequent successful projects in Malaysia, West Africa, andMozambique have led to new FLNG initiatives in South America, Canada, the US, and elsewhere. FLNG technology remains complex and can be advantageous in areaswith limited or unsafe land access, offshore fields that are distant or small, where where land construction costs are elevated. However, risks remain, particularly if vessels are constructed by less experienced shipyards or operated by companies without the necessary technical or financial resources to address potential issues. Comments always welcome! @onmymind @vivekchandra @gulfstreamlng

In this episode, I pick up on last month’s conversationabout irrational optimism around LNG projects reaching FID. I focus first on the US, which has seen five FIDs so farthis year —and another five could follow soon. Big projects are also being announced in Argentina, Canada, and possibly Mozambique, among other places.I'm sceptical that the market can easily absorb such large volumes of new LNG; we’re already witnessing softer prices in major markets, partly because low oil prices are weakening LNG prices further.China, once viewed as a limitless source of LNG demand, hasslowed its demand growth by boosting domestic gas production, expanding renewables, and increasing pipeline imports. Now, China mostly buys Russian LNGdirectly.A major concern is that 90% of the new US LNG salescontracts go to portfolio players and traders—the so-called 'middlemen'—who have no intention to consume the LNG themselves. For example, Sempra’s Port Arthur Phase 2 is selling just 1.5 MTPA out of 13 MTPA to an actual end-user(JERA); the rest is contracted to parties who must resell it for more than they paid. Notably, 5 MTPA is sold back to Sempra, meaning 40% of the facility's output is bought by its own subsidiary. If the price gap between US LNG and global markets narrows, this setup could spell trouble. As I said in the last episode, this is a good time to be inthe permitting process in the US and elsewhere (such as Canada)… but may not be a good time to be committing to add yet more volumes into a saturated market.  Gulfstream LNG is taking this prudent approach. To wrap up, I comment briefly on the recent Venture Global vBP arbitration settlement, and compare it to the Venture Global v Shell case from a few months back.  Comments always welcome! @onmymind @vivekchandra @gulfstreamlng

On My Mind: Episode 45: September 15 2025In this episode, I take a more somber view of the industry than my normal optimistic view. I have recently returned from Gastech, the giant industry gathering that was held in Milan, Italy last week. Instead of positive thoughts, I left with a feeling of concern which can be summed up as 'Irrational Exuberance.' Much like the crazy dotcom era twenty years ago when this term was first used, we are in danger of losing the plot. The gas /LNG industry needs incremental growth to meet incremental energy demand. As I have argued in past episodes, we live in a world of Energy Addition, not Energy Transition. If we grow too fast, and bring too much supply to the market too quickly, we are in danger of upsetting the delicate balance of supply vs demand. At Gastech, there were countless projects and expansion projects tripping over themselves try to get to Final Investment Decision…many of them on the back of offtake agreements with traders and aggregators – not end users. All of this in an environment of low LNG prices which are likely to persist in the near term. And, on the other side of the ledger, we have high capex, high steel prices, high interest rates and high uncertainty of tariffs and other trade barriers. This could get ugly before it gets better. The Fear of Missing Out (FOMO) that is driving projects all over the world to FID may not match the steady incremental demand growth expected. A lot of project developers and equity investors could be impacted if project economics don't live up to optimistic forecasts.This is a good time to be in the permitting process in the US and elsewhere (such as Canada)… but may not be a good time to be committing to add yet more volumes into a saturated market. Gulfstream LNG is taking this prudent approach. For others, I suggest slowing down the mad rush to FID!