Trump to fuel a global glut producers such as Woodside and Santos are safe for now

Donald Trump wants to increase fossil fuel production which has the potential to trigger a global oversupply, however analysts say the big Aussie producers should be insulated for a while.

Incoming US president Donald Trump’s immediate action to bolster oil and gas production will create an eventual global glut but Australia’s largest fossil fuel companies are likely to ride out the immediate effect because expansion takes months if not years to materialise.

Mr Trump is expected to move immediately with a series of executive orders that unwind President Joe Biden’s limits on drilling offshore and on federal land.

Mr Trump is said to also be planning to push for a rollback of exhaust-pipe emissions rules he has described as an “EV mandate”, and resume approvals for plants that export US natural gas.

The expansion will fuel global supplies, but analysts said this was likely to materialise in the medium term and companies such as Woodside, Santos and Origin through its LNG venture would not be affected by lower prices, at least in the near future.

MST Marquee energy analyst Saul Kavonic said Mr Trump’s actions would take time to filter through.

“Liquefy baby, liquefy – but it will take time: Trump is likely to relax regulatory restrictions for LNG projects, including ending the Biden (Department of Energy) pause,” he said.

“But this is unlikely to impact US LNG supply this decade, as Federal Energy Regulatory Commission approvals remain backlogged, which Trump is unlikely to be able to fix quickly, while the cost of inflation and commercial pressures drive delays to final investment decisions.

“The ‘next/third’ US supply wave appears pushed to the right, with volumes to only rise from 2029-30 at earliest.

Asian demand for LNG shows no sign of abating.

“A Trump presidency could help support a larger US LNG wave from 2030 however, as easier approvals and Trump demands for trade partners to buy US goods support more projects.”

The outlook for relatively stable production until later this decade is a boost to companies such as Woodside and Santos.

Both hope to continue to profit from strong demand for LNG, particularly from Asia which is moving away from coal.

Woodside and Santos are poised to deliver increased production into the market. Santos is imminently close to completing works of its $5.7bn Barossa LNG project, while Woodside expects to ship the first LNG cargo from its $US12.5bn ($20.19bn) Scarborough development in 2026.

Both projects have been earmarked as critical for driving higher earnings but the expansion has put them in the crosshairs of environmentalists – which accuse both of hindering global efforts to curtail emissions. While the developments are cheered by investors and analysts, Woodside has strained its standing with investors in recent months with its US expansion.

In late 2024, Woodside acquisition Driftwood from US LNG company Tellurian in a deal worth $US1.2bn. The buyout catapulted it into one of the world’s biggest LNG players. Woodside has subsequently renamed Driftwood as Louisiana LNG.

Woodside has said it hopes to strike partnerships with other companies for minority stakes in the first quarter of 2025 before a final investment decision is taken. Woodside has said production is set to begin in 2028.

A global glut could be beneficial to Australia’s east coast, which faces a shortfall of gas as soon as this year

The Australian Competition and Consumer Commission last week conceded the eastern seaboard would soon be reliant on importing LNG cargoes as supplies from traditional sources begin to deplete, which could put upward pressure on prices.

Importing LNG would require more expensive transport, even if spot cargoes can be sourced from domestic exporters in Queensland.

Proponents of LNG import terminals, however, insist global expansion will soon create an oversupply of LNG, which will offset the higher transport costs, when compared to traditional piped supplies.

Originally published as Trump to fuel a global glut producers such as Woodside and Santos are safe for now