Insight
Breaking down the surge in US LNG capital costs and impact of tariffs
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Report summary
US LNG construction costs are surging as new tariffs compound existing pressures from labour shortages and supply chain constraints. Key cost drivers reshaping the sector: Gulf Coast labour wages rising 40% since 2020, with further increases expected through 2027 Steel tariffs of 50% could add 4.6% to project costs on top of 8% baseline inflation Major projects reporting billions in overruns: Golden Pass (US$2.4 billion), Calcasieu Pass (US$3 billion) Elevated borrowing costs are squeezing project returns and forcing SPA renegotiations Despite cost pressures, project FIDs are unlikely to slow significantly. However, developers face tough choices on EPC contracting, material sourcing, and risk allocation to maintain competitiveness in an increasingly expensive environment.
Table of contents
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Executive summary
- US LNG is booming, but escalating construction costs and tariffs, are creating a major headache for developers
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