Royal Dutch Shell pulled out of a major US liquefied natural gas (LNG) export plant under development following the recent crash in energy prices, quickly followed by its partner, Energy Transfer, delaying its final decision on whether to go ahead with the project to next year.

The Lake Charles, Louisiana, facility is one of several LNG export projects worldwide that have been delayed in recent months by the collapse in global energy prices. Global LNG demand has been hitting record highs for years, thanks to big demand from Asian nations like China and India as they diversify away from dirtier coal power generation.

The crash in oil and gas prices has caused major LNG exporters like Qatar and oil giant Exxon Mobil Corporation, however, to put off gigantic new facilities or expansions of existing projects. US gas prices have recently dropped to their lowest since 1995.

“It’s telling that (Shell) a major would walk away from a major outlet for long-term gas supply,” said Ira Joseph, head of global gas and power analytics at S&P Global Platts, noting that storage, port and pipeline work was already in place on the project. Analysts have anticipated that a number of the projects under development worldwide would not come to fruition. In total, US energy firms alone are developing over 50 billion cubic feet per day (bcfd) of new export capacity - more than all the worldwide consumption of LNG in 2019, which was about 46.3 bcfd, according to Refinitiv Eikon data.

Reuters