- USTR mandate requires 1% of US LNG exports to use US-built LNG carriers (LNGCs) from 2028, rising to 15% by 2047, but feasibility remains doubtful.
- High costs and limited capacity in US shipyards make South Korean LNGCs the preferred choice for developers targeting 2030 start-ups.
- Oversupplied LNG market post-2030 and rising competition will further challenge the viability of US-built LNG carriers.
A recent USTR mandate requires that at least 1% of US LNG exports from 2028 be carried on US-built LNGCs, with the share increasing to 15% by 2047. While Hanwha Philly has proposed constructing an LNGC domestically, Drewry’s analysis suggests the plan is highly unlikely to sustain due to steep costs, South Korea’s dominance in LNG shipbuilding, and severe US shipbuilding constraints.
Jones Act and Compliance Challenges
The Jones Act mandates that vessels transporting goods between US ports must be US-built, US-flagged, US-owned, and US-crewed. However, the US fleet has fewer than 100 Jones Act-compliant ships and virtually no LNG carriers, making compliance nearly impossible for upcoming LNG projects. With 70 mtpa of new US LNG capacity planned by 2030, developers face a choice between limited US shipbuilding or proven South Korean yards.
Developers Favor South Korean Yards
Faced with tight delivery schedules and limited domestic capabilities, many US developers are turning to South Korean shipyards. For example:
- Venture Global has five LNGCs on order at Hanwha Ocean.
- The company is also considering 12 additional LNGCs in South Korea for its CP2 LNG Phase 1 (10 mtpa) and Plaquemines LNG Phase 2 (10.7 mtpa) projects.
According to Drewry’s project database, 70 mtpa of new LNG capacity planned for 2025–26 FIDs will require fresh LNGCs, with many expected to be sourced from South Korea.
Market Pressures and Oversupply Risks
By 2032–33, the US is expected to add 100+ mtpa of LNG capacity, but global competition will be fierce. Qatar’s LNG output will hit 142 mtpa by 2030, with additional supply emerging from Africa and South America. This oversupplied market may make expensive US-built LNGCs even less viable, especially as project economics tighten.
South Korea Retains LNGC Supremacy
South Korea continues to dominate LNG shipbuilding, controlling over 70% of the orderbook as of August 2025. Modern LNGCs built in South Korea cost around $260 million per vessel, already above average levels, yet still far cheaper than potential US-built options. By contrast, a US-built LNGC could cost $500 million to $1 billion—2 to 4 times higher than South Korean vessels. This stark cost gap will likely drive US developers to favor Korean yards, even if domestic options exist.
Limited Outlook for US-Built LNGCs
The US has not built an LNGC since the 1970s, and its current shipbuilding industry faces major logistical, legal, environmental, and workforce challenges. Even with political efforts to revive domestic yards, the reality remains that US-built LNGCs are prohibitively expensive and would reduce the competitiveness of US LNG exports.With most projects targeting FID in 2025–26, developers are already investing with South Korean shipbuilders to avoid delays. Unless radical reforms and investments reshape US shipbuilding, South Korea is expected to remain the global leader in LNGC construction well beyond 2030.
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Source: Drewry
