Lack of U.S. investment in gas pipelines 'scary,' Cheniere CEO says

Cheniere Energy (NYSE:LNG) said Monday it expects to ship more liquefied natural gas to Asia this year, after delivering ~70% of LNG cargoes to Europe in 2022.

Noting Cheniere (LNG) has expanded its long-term customers to 30 from 12, it does not matter how much Russian gas returns to the market if producers including Cheniere continue signing customers to long-term contracts, CEO Jack Fusco told the CERAWeek energy conference in Houston.

China will no longer act as "relief valve" by supplying LNG to Europe like it did during last year's energy crisis, and may instead take flows away from the continent to serve its own growing economy, Cheniere (LNG) executives said.

Fusco called the lack of U.S. investment in natural gas pipelines "scary," noting last year was the lowest year for building pipeline infrastructure in the U.S. since 1995.

Europe is adding the infrastructure needed to import LNG for the long-term, reducing its reliance on Russian pipeline gas, but the U.S. will need more development to meet future demand, Fusco said.

Southwest Louisiana used to be the "easy button" for building pipelines, but infrastructure there and in the U.S. generally has not kept up with the country's rapidly accelerating pace of gas exports, chief commercial officer Anatol Feygin said.

But material and financing costs have increased the fixed liquefaction fees required to support new U.S. LNG export infrastructure to the high-$2s/MMBtu, up from a range of $2.00-$2.25 less than a year ago, Fusco said.

Cheniere Energy's (LNG) "valuation is relatively high given its significant debt level and immense derivative losses," Harrison Schwartz writes in an analysis published recently on Seeking Alpha.