China’s LNG Purchases<\/h3>\n
U.S. LNG has accounted for nearly 6% of China’s imports over the last year: Bernstein\u201cChinese companies will have an aversion to investing in U.S. LNG projects in the short term\u201d if tariffs are imposed, said Saul Kavonic, Credit Suisse Group AG\u2019s director of Asia energy research. \u201cAustralia and Qatar\u2019s LNG sectors will benefit from being seen as a lower risk source of supply by customers in the world\u2019s fastest growing LNG market, at least over the near term.\u201d<\/p>\n<\/div>\n<\/div>\n<\/figure>\n
Booming Demand<\/h3>\n
China\u2019s push to use more natural gas is driving global demand growth, with LNG imports\u00a0jumping\u00a047 percent in the first seven months of the year. Though it\u2019s the third-largest buyer of U.S. cargoes, American supply made up a little less than 6 percent of purchases over that period, according to Sanford C. Bernstein & Co. If U.S. companies can seize 20 percent of the market by 2030, it could lower the trade deficit with China by $50 billion, Bernstein estimates.<\/p>\n
Higher oil prices and a surge in LNG demand have reignited interest in export ventures, with about\u00a015 U.S. projects\u00a0targeting final investment decision this year and next, the most of any nation, according to Bloomberg NEF. Projects have been seeking investments or off-take agreements from China, which earlier this year topped Japan as the world\u2019s biggest gas importer.<\/p>\n
\u201cIt is hard to see any of these hopeful projects getting another Chinese buyer signed up for long-term volumes\u201d if China slaps tariffs on U.S. gas, Trevor Sikorski, an analyst at Energy Aspects Ltd., said by email. \u201cGiven China is a huge part of global LNG demand growth, that is a big headwind for these new projects.\u201d<\/p>\n
Liquefied Natural Gas Ltd., which is yet to make a final investment decision of the $4.35 billion Magnolia LNG project in Louisiana, expects Chinese buyers will wait for uncertainty on tariffs to be removed before signing contracts, Chief Executive Officer Greg Vesey\u00a0said\u00a0Monday at an industry conference in Barcelona.<\/p>\n
Exporting nations such as Australia and Qatar could benefit from the trade tensions, according to Xizhou Zhou, an analyst at IHS Markit.<\/p>\n
\u201cYou have two important parties in the LNG market — one is a very important large buyer, one is an important large supplier — less likely to negotiate with each other,\u201d he said by phone. \u201cSo Qataris, Australians will have less competition when it comes to the Chinese market for long-term contracts. \u201d<\/p>\n
The GasLog Greece, which left Cheniere Energy Inc.\u2019s liquefied natural gas export terminal in Louisiana on Aug. 15 en route to China, changed its destination mid-journey to South Korea. It was one of at least two U.S. LNG shipments heading for China during the past month. The other ship, Rioja Knutsen, arrived Sept. 3 at Tianjin.<\/p>\n
More than a month ago, state-owned PetroChina Co. contemplated\u00a0temporarily\u00a0halting purchases of U.S. gas and increasing buying from other nations, while ENN Group, a private gas distributor and burgeoning LNG importer, decided not to buy any supplies from the U.S. this winter, Bloomberg reported last month.<\/p>\n
Most LNG cargoes are sold at a price linked oil, whereas U.S. supplies are often priced off domestic gas prices, which have declined about 4 percent this year. China\u2019s decision comes as U.S. gas has become cheaper than oil-linked cargoes and amid the prospect of crude continuing to rise over the next few years. LNG spot prices in Northeast Asia this year have averaged the highest since 2014, at around $9.70 per million British thermal units. Prices last year surged on the back of China\u2019s soaring consumption.<\/p>\n
That\u2019s why the tariffs are an especially cruel blow for companies backing prospective U.S. liquefied natural gas export terminals, including\u00a0Tellurian Inc.,\u00a0Liquefied Natural Gas Ltd.\u00a0and\u00a0Pembina Pipeline\u00a0Corp.\u00a0A 25 percent levy would lift U.S. LNG back above oil-linked costs.<\/p>\n On the other hand, that\u2019s good news for energy giants that have LNG prospects outside the U.S. That includes Irving, Texas-based\u00a0Exxon Mobil Corp., which has ties to projects in Qatar, Papua New Guinea and Mozambique, and\u00a0Royal Dutch Shell Plc, which is aiming to build a plant in western Canada, operates a project in Australia and has one of the world\u2019s biggest LNG trading portfolios.<\/p>\n Exxon also\u00a0signed\u00a0a preliminary deal earlier this month to participate in a potential LNG import terminal in southern China, as well as supply it with gas. Separately, PetroChina\u00a0inked\u00a0a deal with Qatar to purchase 3.4 million tons of LNG annually, the Chinese company\u2019s biggest supply deal yet. The agreement, which will start this month, could help China forgo some U.S. supplies during peak winter demand.<\/p>\n Merchant trading houses like\u00a0Vitol SA,\u00a0Trafigura Group Pte. Ltd.\u00a0and\u00a0Gunvor Group Ltd., may also be able to benefit by, for example, routing U.S. LNG to buyers including Japan and South Korea while selling Malaysian or Australian fuel meant for those markets to China instead, all with a little added mark-up for themselves.<\/p>\n \u2014 With assistance by Dan Murtaugh, and Anna Shiryaevskaya<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" U.S. gas is under threat as a trade war with China escalates. China may target American liquefied natural gas in retaliation for a fresh round of duties announced Monday by the U.S….<\/p>\n","protected":false},"author":1,"featured_media":1717,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[46,57,90,96,107,137,139,160,174,184,201,202,209,232,233,244,246,249,256,267,277,279,288],"class_list":["post-1695","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-aramco","tag-baroudi","tag-democracy","tag-doha","tag-embargo","tag-gas","tag-gazprom","tag-international-maritime-disputes","tag-lebanon","tag-maritime-disputes","tag-offshore","tag-oil","tag-opec","tag-putin","tag-qatar","tag-rosneft","tag-roudi","tag-russia","tag-saudi","tag-straddling-hydrocarbons-reserves","tag-total","tag-trump","tag-usa"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/1695","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1695"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/1695\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/1717"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![](\"https:\/\/assets.bwbx.io\/images\/users\/iqjWHBFdfxIU\/iSIVsfa8h8ho\/v2\/620x-1.png\")
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