December 19, 2025 [Reuters]- Energy Transfer said on Thursday it was suspending the development of its Lake Charles liquefied natural gas export facility in Louisiana, the first LNG project to be halted after U.S. President Donald Trump expedited permits for them in January.

The suspension comes as the company has been facing rising costs and amid fears of a looming global oversupply as new LNG output comes online.

In a statement, Energy Transfer said it will focus on allocating funds to natural gas pipeline projects, which it believes provide superior risk and return profiles.

The pipeline and storage company said it remains open to discussions with third parties that may have an interest in developing the LNG project.

Energy Transfer executives became nervous about Lake Charles LNG in the final stretch of development because the company still sees itself as a pipeline operator rather than an LNG-focused company, said a person familiar with the project.

Offtake agreements for Lake Charles LNG had been structured in a way to protect Energy Transfer from a potential glut in LNG supply, the person added.

Energy Transfer did not immediately respond to a request for additional comment. The company had previously said it would only give the facility the financial go-ahead if it sold 80% of the project to equity partners.

Lake Charles LNG was projected to have a liquefaction capacity of 16.45 million metric tons per annum (mtpa).

The suspension could impact customers including U.S. oil producer Chevron. Energy Transfer said in June it would supply Chevron with an additional 1 mtpa from Lake Charles, bringing the total contracted volumes to Chevron to 3 mtpa. The oil producer did not immediately respond to a request for comment.

Contracting has slowed down across all LNG facilities, and contract rates on sale and purchase agreements are much lower than previous rates, squeezing margins for LNG developers, analysts said.

“There is quite a bit of capacity out there, and way too many projects. Some more projects will wither away,” said Uday Turaga, the founder of energy research and consulting firm ADI Analytics.

ENERGY TRANSFER TO EXPAND PIPELINE CAPACITY

The Dallas-headquartered company on Thursday also announced an increase in the transportation capacity of its Transwestern pipeline’s planned expansion project to meet additional customer demand.

The pipeline expansion project, called Desert Southwest, will now cost about $5.6 billion, excluding allowance for funds used during construction, Energy Transfer said. The project was previously expected to cost about $5.3 billion including a $600 million of allowance for funds used during construction.

The project’s main pipeline diameter will be increased from 42 inches (106 cm) to 48 inches, which will grow the project’s capacity to up to 2.3 billion cubic feet per day, Energy Transfer said. The design capacity of the pipeline was previously 1.5 bcf per day.

The pipeline is expected to be in service by the fourth quarter of 2029.

“There is significant demand growth in the Desert Southwest region, including the potential to retire and/or convert coal-fired power plants to natural gas, which could further benefit the project,” the company said, adding the ultimate capacity of the expansion project would be based on market demand.