Very usefull links


News links




Dow Jones

Oil price



Views and News





U.S. energy in crosshairs on Trump's trade war

Lindsey Janies /Bloomberg

The Asia Vision LNG carrier ship sits docked at the Cheniere Energy Inc.  Sabine Pass, Texas.

- China, world's biggest gas buyer, has threatened U.S. supplies

- U.S. LNG may be included in next round of retaliatory duties

By Stephen Stapczynski

Petroleumworld 09 18 2018

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. The Asian nation said last month it was considering a 25 percent tariff on the fuel

The move would be a setback for a burgeoning energy relationship that was on track to be a boon for both economies. The move would also add new pressure on the U.S. LNG industry, which is competing with Russia, Australia and Qatar for market share in China, the world's biggest gas buyer. Just last year, U.S. officials were courting Chinese companies to invest in new export projects.

The tariffs would signal how much pain Presidents Xi Jinping and Donald Trump are willing to endure not to back down from a trade fight. Trump risks stifling the U.S. gas export industry, which is seeking an estimated $139 billion to fund more than a dozen projects, while Xi threatens to raise the cost of his drive to eliminate smog by burning less coal.

“Chinese companies will have an aversion to investing in U.S. LNG projects in the short term” if tariffs are imposed, said Saul Kavonic, Credit Suisse Group AG's director of Asia energy research. “Australia and Qatar's LNG sectors will benefit from being seen as a lower risk source of supply by customers in the world's fastest growing LNG market, at least over the near term.”

Booming Demand

China's push to use more natural gas is driving global demand growth, with LNG imports jumping 47 percent in the first seven months of the year. Though it's 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.

Higher oil prices and a surge in LNG demand have reignited interest in export ventures, with about 15 U.S. projects targeting 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's biggest gas importer.

“It is hard to see any of these hopeful projects getting another Chinese buyer signed up for long-term volumes” if China slaps tariffs on U.S. gas, Trevor Sikorski, an analyst at Energy Aspects Ltd., said by email. “Given China is a huge part of global LNG demand growth, that is a big headwind for these new projects.”.

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 said Monday at an industry conference in Barcelona.

Exporting nations such as Australia and Qatar could benefit from the trade tensions, according to Xizhou Zhou, an analyst at IHS Markit.

“You 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,” he said by phone. “So Qataris, Australians will have less competition when it comes to the Chinese market for long-term contracts. ”

The GasLog Greece, which left Cheniere Energy Inc.'s 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.

More than a month ago, state-owned PetroChina Co. contemplated temporarily halting 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.

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's 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's soaring consumption.

The trade spat hasn't stopped all American companies from pursuing business opportunities in China. Exxon Mobil Corp., the U.S. energy behemoth, signed a 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 inked a deal with Qatar to purchase 3.4 million tons of LNG annually, the Chinese company's biggest supply deal yet. The agreement, which will start this month, could help China forgo some U.S. supplies during peak winter demand.

— With assistance by Dan Murtaugh, and Anna Shiryaevskaya


Story by Stephen Stapczynski from Bloomberg News. 09 17 2018


We invite all our readers to share with us
their views and comments about this article.

Write to

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to:

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1

November 13 - 15, 2018.

Gubkin University, Moscow
SPE Student Chapter






Editor & Publisher:Elio Ohep/
Contact Email:

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.