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The US is expanding its capacity to export liquefied natural gas at such a rapid pace that it risks flooding the market and driving down prices, energy bosses have warned.

Three terminals were given the green light last month alone, with five more set to follow by year-end, as the world’s second-biggest LNG supplier pushes ahead with plans to more than double exports by the conclusion of Donald Trump’s second term as US president.

This follows the administration’s move to lift a pause on new LNG terminals imposed by Joe Biden in 2024 that angered the industry.

US producer Expand Energy is forecasting that the country will be able to export 28bn cubic feet a day of gas from its Gulf coast by 2030, equivalent to four times the UK’s daily demand.

Yet the speed and scale of the expansion has unsettled some leading LNG traders.

Wael Sawan, chief executive of Shell, which runs the world’s largest LNG portfolio, said this week that the build-out was “not economically fully rational”, given the high cost of building new terminals, and that he was “surprised” at how many had been greenlighted.

He told the Economic Club of New York that Shell would reassess the market before deciding whether to expand its recently started LNG Canada facility.

Patrick Pouyanné, head of TotalEnergies, another big LNG trader, questioned whether there would be markets for such a glut of US gas.

“Let’s see if they find financing for all these projects,” he said, adding that some Asian buyers had signed deals to please Trump and lower tariffs.

The French executive told last month’s Gastech conference that the world was “building too much” LNG capacity, and predicted oversupply “for some years if all these projects come on stream”.

Companies behind the developments insisted the predicted growth in global LNG demand was real.

“It’s a growth business for 30 years and there’s plenty of room for competitors in the market,” said Ben Dell, chair of Commonwealth LNG, which is seeking approval for its Louisiana terminal after signing a long-term deal to supply 1mn tonnes of LNG a year to Japan’s largest utility. 

He accepted that a short-term glut might hit prices, but was confident that the market would adjust. “We see significant elasticity of demand to lower prices, which a lot of market analysis fails to account for,” he said.

Much of the industry’s optimism about LNG rests on predictions that Asian economies will consume the fuel in ever greater quantities as they reduce their reliance on coal. 

Yet, this belief has been tested by a marked drop in LNG shipments to China, which has not imported any from the US since February. The country has instead boosted domestic production and is buying more pipeline gas and LNG from Russia

Nevertheless, US producers expect China’s growing needs to justify the investment in capacity.

“There’s a lot of demand that’s not being met in China today,” said a senior energy company executive. “When you make more affordable gas available, the market reacts dramatically.”

He added: “Over the long term, you’re going to see very significant demand growth for LNG into China, and that will be complemented by many other markets in developing Asia.”

Will Jordan, chief legal and policy officer at EQT, a leading US gas producer, also thought that any glut would be temporary, and said US demand was also rising on the boom in power-hungry artificial intelligence data centres.

“Supply leads demand — you put the supply on the market and demand gets created.,” he said. “Over the long term we’re very bullish.”

Wood Mackenzie, the energy consultancy, said that while some companies that had committed to buying the output of the new LNG terminals might feel the pain of lower prices, other could benefit.

“European consumers could be the biggest winners as prices soften, while Asian buyers with firm demand benefit from locking in long-term contracts at lower prices,” it said in a note to clients.

Benjamin Lakatos, founder of energy trader MET Group, agreed that “very low” LNG prices were possible while noting how the cyclical nature of the sector made such boom and busts inevitable.

“The oil and gas industry always makes the same mistake,” he said of the recurring trend for companies to slash investment when prices fall.

“Then, sooner or later, the price goes up again. It’s how the market works.”