US LNG Exports Rely on South Korean Ships
Energy dominance is interdependence dressed up as independence
US LNG energy dominance has a structural vulnerability in shipping. The US is highly dependent on South Korean shipbuilding and fleets owned/operated by foreign nations.
Remediating this vulnerability through developing an LNG shipbuilding sector lies somewhere between implausible and very hard requiring decades of concerted policy, economic, and research support.
Public attention in shipping renewed with the choking of the Strait of Hormuz. The current conflict with Iran began on February 28 and by March 4, a viral video circulated showing vessel traffic through the Strait down by 90%.
This post is about international shipping of liquid natural gas (LNG) from a US perspective. Ships and ports are a latent interest of mine inspired by global events and local community conflict over plans to expand the Port of Wilmington (NC).
I welcome feedback.
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The US is the world leader in LNG exports. LNG exports are a cornerstone of the President and the Secretary of Energy directives for “Unleashing” “American Energy Dominance.” The President’s EO frames this focus on exports as a matter of national security:
Sec. 8. Protecting America’s National Security.(a) The Secretary of Energy is directed restart reviews of applications for approvals of liquified natural gas export projects as expeditiously as possible, consistent with applicable law. In assessing the “Public Interest” to be advanced by any particular application, the Secretary of Energy shall consider the economic and employment impacts to the United States and the impact to the security of allies and partners that would result from granting the application. [bold mine]
Several months later the DOE reiterated the intention to use LNG exports as a strategic geopolitical asset,
DOE believes that increasing U.S. energy production and exports can only enhance the nation’s geopolitical influence and promote U.S. interests.
However, the US LNG exports rely entirely on foreign built and overwhelmingly foreign owned vessels.
This reliance is neither unrecognized nor well known. It is sort of like the supply chain itself- out of sight and out of mind but sounds faintly familiar.
This issue and how it bears on half-baked considerations for re-developing a US shipbuilding industry is underlined in a recent Congressionally mandated report contracted to the CNA Corporation :
Analysis on national security–related maritime issues is thin outside the defense realm. Little research has been done on U.S. vulnerabilities to economic coercion or disruption. Relatively little is known about maritime supply chains that underpin U.S. trade and the industrial base. The U.S. Government does not maintain detailed information on these matters, and there is little usable analysis that might shed light on the nature or extent of the threat.
CNA writes of commercial shipbuilding in general, which would include the technologically complex LNG carriers but is not limited to it.
Large LNG carriers are among the most technically complex commercial vessels.
The complexity is due to the extreme cold and pressure required to keep the gas liquid. These cryogenic conditions challenge the structural integrity of the ship’s steel by making it brittle. Moreover, some of the LNG inevitably regassifies or “boils-off” requiring the capability to burn it off or rout it to power the vessel itself.
The bottom line is that making an LNG ship is difficult and there are very few places in the world that do it. South Korea is the leader in LNG shipbuilding. By one estimate, South Korea companies have built 93% of the LNG carriers in service.
Korea’s shipping industry is decades in the making. Its focus on producing highly technical ships, rather than competing with China for total volume of ships (for which China excels), was a strategic decision as a means of rebounding from the Global Financial Crisis.
The ships, once built, are owned and operated by a host of players of which the US has a minor role as shown below.
That the US depends heavily on foreign shipping is a recognized vulnerability predating the current administration but largely focused on China. An investigation initiated under the Biden Administration reported that (p.144):
The resulting economic security risks of over-relying on a single economy, especially that of a strategic competitor [i.e. China], for maritime, logistics, and shipbuilding burden or restrict U.S. commerce.
Early in the second Trump Administration, the lack of US shipbuilding capacity came to the fore with an April 2025 EO “Restoring America’s Maritime Dominance” with the stated purpose to
to revitalize and rebuild domestic maritime industries and workforce to promote national security and economic prosperity.
Shortly thereafter the US Trade Representative (USTR) announced that LNG producers would need to transport 1% of their exports on US built ships starting in April 2029, increasing to 15% in April 2047 (see Annex IV).
Natural gas producers balked.
According to reporting, the American Petroleum Institute CEO stated that hitting the 1% mark would require five American built ships. The advocacy group Center for LNG said it clearly,
There are no such vessels in existence today, and building them would take decades, making compliance impossible for the industry.
By October, the USTR had removed the US built vessel requirement for LNG exports.
In late 2024, South Korea acquired the aging Philly Shipyard for $100 million, now known as the Hanwha Philly Shipyard.
The yard had been struggling financially. In 2023, the Congressional Research Service (CRS) described its situation as follows:
Up until 2018, Philly Shipyard built only commercial vessels, but, running out of orders and facing closure, it pursued and was awarded the construction of five maritime academy training ships funded by the federal government. Despite those orders and subsequent commercial orders, the shipyard continues to operate at a loss.
Hanwha later announced plans to invest $5 billion for upgrades and expansion of the Philly site. This amount is part of a larger South Korean $150 billion US shipbuilding investment plan announced in July 2025.
The shipbuilding venture is itself part of an overall $350 billion investment MOU (below) whereby President Trump and Secretary of Commerce Lutnik select projects for Korea to invest. Korea has the right to decline investment in the project, but should they do so, then the President can impose tariffs on Korean imports.
Korea is not obligated to invest more than $20 billion a year and the whole deal expires January 19, 2029.
That’s right. Korea promised the US $350 billion over 3.5 years while spending no more than $20 billion per year.
In exchange for this arrangement, South Korea dodged Trump’s tariffs and deepened its economic relationship with the United States. South Korea also advanced its broader industrial ambitions known as “K-Shipbuilding Super Gap Vision 2040.” The strategy aims to cement South Korea’s dominance in technologically advanced shipbuilding through targeted R&D investment, strategic shipyard acquisitions, and positioning Korean yards to meet global demand for next generation vessels.
After Hanwha purchased the Philly yard, its parent company, Hanwha Group, proceeded to place an order for a Philly built LNG carrier. The price tag is around $250 million. The number has its critics; some estimate that a US built LNG carrier could cost multiples of this number.1
Moreover, “built” in the United States is used a bit loosely here. The ship’s parts will be constructed in South Korea and moved to Philly for final assembly.
It is instructive to see the scale of the difference between Hanwha Ocean in Korea and Hanwha Philly in the US. In the below images, the South Korea facility is 1.2 miles across; the US facility is a third of a mile across.
Simply put, the US does not have the physical infrastructure to build ships like it says it wants to build ships in order to underpin its own global dominance.
US dominance as a global LNG exporter is interdependence dressed up as independence. The interdependency is not an inherent problem but it is important context that suggests the rhetoric of energy dominance should be matched by awareness of its structural dependencies.
Google AI showed me several options of critics making this point but I was paywalled from all of them.
The USA has a comparative advantage in NG which can be shipped as LNG. South Korea has a comparative advantage in building LNG Ships. Looks pretty sensible.
However, the USA clearly needs to increase its capabilities in building other ships including Naval. It would be unfortunate if that focus was lost chasing such a specialized niche.
Personally, I am uncertain if in a fracturing global trade world whether LNG is a longterm opportunity. Nuclear and Coal are a lot easier to stockpile.
I think that LNG vessel control is more important for imports than exports. In any case, US ownership is more important than the vessel's origin unless there is a shortage of shipyard capacity.
Congress can provide economic incentives for US ownership, including buying ships for the US Mercant marine. I emphasize incentives for US ownership and flagging, not tariffs and other protective measures that ultimately backfire.