MW Here's what the E.U. and South Korea trade deals mean for U.S. natural-gas investors

By Myra P. Saefong

The liquified form of natural gas can help meet energy-product demand - but can the U.S. meet the challenge?

The European Union and South Korea have pledged to buy billions of dollars' worth of energy products under trade deals with the Trump administration, as the White House aims to capitalize on the role of the U.S. as the world's largest exporter of liquefied natural gas. But are U.S. producers up to the challenge?

LNG - the liquid form of natural gas (NG00) - accounts for a sizable share of U.S. energy imports to both the E.U. and South Korea. That's why the new trade agreements "represent a significant step-change" for the U.S. market, said Rob Thummel, senior portfolio manager at Tortoise Capital.

In 2024, the U.S. was the largest supplier of LNG to the E.U., accounting for almost 45% of total LNG imports, according to E.U. data. The U.S. also provided 12.2% of South Korea's total LNG imports that year, according to S&P Global.

The U.S. is poised to see $750 billion in energy-product purchases from the E.U. over a three-year period, or roughly $250 billion per year, and South Korea pledged to buy $100 billion in U.S. energy products over four years, or about $25 billion worth per year.

These deals encompass all forms of U.S. energy exports, not just LNG, but LNG exports are expected to "at least double, and potentially more than double, over time," Thummel said.

The E.U. and South Korea are already major buyers of U.S. LNG, and U.S. exports of the fuel have been climbing since 2016, save for a period during the pandemic when energy demand sharply dropped, U.S. Energy Information Administration data show.

The E.U. is increasingly dependent on U.S. LNG, said Ed Cox, LNG specialist and editor at Independent Commodity Intelligence Services. He expects U.S. LNG to "maintain and to grow its share in overall European supply in the absence of Russian gas over the next five years," but he said the idea of an annual $250 billion E.U. target for U.S. energy-product purchases is "unrealistic."

He said the global LNG market currently has a complete annual value of around $200 billion, including all supply, so it's "hard to imagine" how U.S. LNG alone could help bring that value close to the $250 billion annual target for the E.U.

Timing

The purchase commitments come at time when "low-cost energy is essential for continued U.S. economic growth," said Thummel.

Read: Surging electricity demand is just one reason natural gas looks so appealing to investors this summer and beyond

"As we enter the age of electricity, electricity demand is projected to rise steadily for decades," he said. "Natural gas, thanks to its reliability and scalability, will play a central role in meeting this demand."

'As we enter the age of electricity, electricity demand is projected to rise steadily for decades. Natural gas, thanks to its reliability and scalability, will play a central role in meeting this demand.'Rob Thummel, Tortoise Capital

If U.S. LNG exports double or more, and natural gas continues to fuel electricity generation, domestic natural-gas demand could rise 30% by 2030, said Thummel. His company manages the Tortoise Energy Fund TNGY, which focuses on companies that benefit from rising U.S. energy exports as well as increasing demand for electricity,

U.S. energy production will need to "accelerate" to meet growing short-term demand, and U.S. shale producers have "risen to the challenge before," Thummel said. He also said the U.S. operates the world's most "extensive energy infrastructure and pipeline network."

So "if the world demands more U.S. energy, the foundation is already in place to meet that demand over the long term," he said.

In the short term, however, that challenge may not be quite as easy to overcome.

The U.S. has limited ability to increase its output of energy products, especially petroleum-based products, said Gary Cunningham, director of market research at Tradition Energy. And when it comes to LNG, most U.S. export facilities have standing contracts for their output already in place, which are "key to them receiving financial support and reaching [a final investment decision] to start construction years ago."

Most of these agreements are with Asian buyers, because European emissions rules, which had some prohibitions against using gas sourced by hydraulic fracturing, made U.S. facilities "untenable" for European utilities, he said.

That implies that for Europe to buy more U.S. LNG, it would either have to buy it on the secondary market, limiting the benefit to U.S. businesses, or commit to contracts for the next wave of LNG buildout, "which is many years away, so they fall outside [that] three-year window," Cunningham said.

So the E.U. and South Korea commitments are a "great gesture, but are likely not realistic to actually be met," he said.

Korean utilities, including Korea Gas Corp., or KOGAS, have longstanding contracts with LNG terminals such as Sabine Pass in Louisiana, so their commitment to buy more could "manifest in them taking more deliveries of the cargoes rather than simply holding rights to the output from the terminals," he said. "That does bring some firmness to export-related demands, but not much since the terminals rarely face periods where they decrease output due to a lack of demand."

Meanwhile, he said, "Europe can certainly strive to source more resources from the U.S., but how much will it need on a monthly or annual basis will change over time based on economic factors, weather and social shifts in consumption."

Production limits

Questions about whether the U.S. even has the ability to meet such large demand for energy products were raised when the Trump administration announced that its trade deal with the E.U. included a $750 billion purchase of U.S. energy products by 2028.

Read: The E.U. to buy $750 billion of U.S. energy products. Why that's 'absurd.'

Cox said U.S. LNG production will double by the end of the decade, but that goes beyond President Donald Trump's period in office and is also based on projects that are already under development, with contracts in place that were signed over the past five years.

The trade deal with South Korea announced on Wednesday includes a commitment by that country to buy $100 billion of U.S. LNG and other energy products, according to a post by Trump on Truth Social. Along with that, he wrote, "South Korea will give $350 Billion Dollars for Investments owned and controlled by the United States and selected by myself, as President."

Investment in energy infrastructure could certainly help the U.S. meet the higher demand for energy products outlined under the trade agreements.

Robert Yawger, director of energy futures at Mizuho Securities USA, suggested in a recent note that the E.U. could invest in U.S. energy infrastructure, including domestic production of oil and gas, pipelines and LNG export facilities.

"That is not a new concept, and many U.S. energy projects are already owned by multiple energy partners, including international partners," he said.

U.S. conglomerate Koch Industries and South Korea's National Pension Service, for example, own stakes in the Colonial Pipeline, the largest pipeline for refined petroleum products in the U.S. In April, however, Brookfield Infrastructure Partners announced it had reached a deal to acquire the asset portfolio of Colonial Enterprises, which includes the pipeline.

"There are endless possibilities for the development of U.S. energy resources, and with the sudden explosion of energy-hungry [artificial intelligence], even a building of nuclear assets is a possibility," Yawger said.

Read: Trump and Meta's nuclear deals address the AI-fueled energy crisis. But can U.S. uranium supply meet demand?

An E.U. buildout of U.S. energy infrastructure, in partnership with U.S. firms, may be the "piece of the puzzle that puts the $250 [billion] per year number within reach," he said.

Investors looking to benefit from this onslaught of energy-product demand can consider energy-infrastructure companies that operate export facilities or facilitate exports, Thummel said. Those include Cheniere Energy Inc. (LNG), Energy Transfer LP (ET) and Enbridge Inc. $(ENB)$.

-Myra P. Saefong

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August 02, 2025 08:00 ET (12:00 GMT)

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