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US-made LNGCs—a mere dream or a possible future shift?

29 Aug 2025Print

The recent discussion and possibilities of revitalising the US shipbuilding industry amid the USTR proposition raise several questions, especially about the feasibility of building an LNG carrier in the US. A mandate under USTR requires 1% of US LNG to be exported in US-built LNGCs from 2029, which should subsequently increase to 15% by 2047.

While Hanwha Philly proposed a US-built LNGC, Drewry believes the sustenance of such propositions is highly unlikely, given the US’ high newbuild prices, South Korea’s continued supremacy in LNG shipbuilding as well as other shipbuilding constraints (in the US) that cannot be overrun in the near term, especially when massive planned capacities in the US are aiming to start operations by the end of this decade.

US policy push mandates US-built LNGCs, which appears as a far-fetched dream

US shipbuilding capabilities are currently insufficient to meet the LNG vessel demand, failing even to comply with the Jones Act requirements for domestic needs, especially for specialised vessels like LNG carriers (LNGCs). This has forced project developers to consider options between domestic and South Korean shipyards for new projects planned around 2025–26 that require delivery by 2030.

Jones Act and shipbuilding compliance

The Jones Act mandates that ships transporting goods among US ports be US-built, US-owned, US-flagged and US-crewed.
There are currently fewer than 100 Jones Act-compliant ships, with virtually no LNGCs built in the US, making compliance extremely challenging for new LNG projects.

US LNG will need more LNGCs as 70 mtpa of planned projects eye start-up by 2030

Developers planning large-scale US LNG projects targeting FID in 2025–26 must order their vessels soon. Considering limited US capabilities, many owners are ordering from South Korea or considering South Korean-built vessels branded or reflagged for the US.

US project developers opt for South Korean-built vessels: Venture Global has five LNGCs on order at Hanwha Ocean in South Korea. The company also envisages placing an order for 12 LNGCs in South Korea for its upcoming LNG volumes via CP2 LNG Phase 1 (10 mtpa) and Plaquemines LNG Phase 2 (T19-36) (10.7 mtpa).

According to Drewry’s project database, about 70 mtpa of new planned capacities will require LNGCs (considering FID for all the planned projects is secured), with these projects aiming to start supply by 2030.

Figure 1: US LNG projects start-up schedule

Source: Drewry Maritime Research

In all likely scenarios, only US project developers would be willing to place an order in the US than in South Korea: US and South Korean shipbuilding capabilities will likely remain in the mix for developers over the next decade, especially as US shipyards alone cannot meet scale or timeline requirements. However, we expect South Korean LNGCs to maintain supremacy over other shipbuilding markets, such as the US and China, with available options.

Although policy uncertainty exists under changing US administrations, with Trump acknowledging the need to buy ships from South Korea while also signalling intended revitalisation of domestic shipyards, these legislative reforms remain disputed and are subject to political shifts.

Moreover, any planned capacities post-2030 remain uncertain, as we expect the market to be oversupplied

Oversupplied market conditions will further question the feasibility of carriers being built in the US and at higher prices. The US alone is poised to add more than 100 mtpa by 2032-33, for which we keep a cautious outlook, as US LNG will need to compete with Qatari LNG, which will reach 142 mtpa by 2030. With new projects starting operations in Africa and South America, LNG supply could get a further boost.

The oversupplied market and intensified competition will dissuade new projects, especially those that plan to start after 2032-33.

South Korean-built LNGCs will lead LNG shipbuilding

South Korean shipyards are leading the way in LNG shipbuilding, with South Korea commanding over 70% of the orderbook as of August 2025.

We expect this trend to persist even beyond 2030 as shipbuilding slot availability rises at the South Korean yards, easing the current high newbuild prices. A modern LNGC built in South Korea costs over $260 million, which is considered above the normal average price. Additionally, shipowners are likely to call on South Korean yards instead of China, which could tighten the shipbuilding capacity fast and arrest the fall in prices.

Figure 2: South Korean shipyards continue to command LNG ordering

Note: As on August 2025.

Source: Drewry Maritime Research

We also expect a new LNGC built in the US to cost even more, approximately 2 to 4 times (roughly $500 million to $1 billion) that of a Korean-built LNGC. The considerable cost differential will compel US project developers to opt for South Korea's shipyards, as high project costs would render these projects unviable and less competitive compared with non-US LNG.

Conclusion: US LNG shipbuilding is fraught with challenges

The US has not built any LNGC since the 1970s: The US has long been absent from the shipbuilding business, and its extremely constrained capabilities limit any hope for a revival. The US shipbuilding industry faces not only logistical barriers but also legal, environmental, infrastructural and financial constraints—such key challenges cannot be resolved in the near term, even despite the Trump administration's push for reviving US shipbuilding.
Cost will remain highly challenging to the US shipbuilder, given the higher capital cost and lack of specialised labour and skilled workforce. According to market estimates, US-built LNGCs are significantly costlier—up to 2–4 times more expensive than their South Korean counterparts. This will raise export logistical costs, making US LNG exports less competitive.
Most project developers in the US are eyeing FIDs in 2025–26, with the influx of investment positioned/decided already. The revisions entailing or considering US-built ships for their projects could delay the project development process, increasing the chances for US LNG to miss opportunities in an era when LNG demand is expected to surge.