Mexico



Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

 

China could replace U.S. gas, Goldman sees end to trade

China slaps 10% levy on U.S. LNG instead of threatened 25%. Chinese buyers are said to avoid U.S. cargoes on trade risks

By Stephen Stapczynski and Dan Murtaugh

SYDNEY/SINGAPORE
Petroleumworld 09 20 2018

Even with China's smaller-than-threatened tariff on U.S. natural gas, American cargoes may still be kryptonite for Chinese traders trying to navigate the ongoing trade war.

Chinese buyers will seek to avoid purchasing U.S. liquefied natural gas as long as any tariffs are in place because of the risk that duties may rise further and possibly without warning, according to officials from four importers. While they said they would prioritize cargoes from other suppliers, they couldn't entirely rule out buying U.S. shipments. The officials asked not to be identified discussing procurement strategy.

“The tariff could end direct trade in LNG between the two countries,” Goldman Sachs Group Inc. analysts including Christian Lelong said in a Sept. 19 report. “The decline in trade flows will likely be swift because China imports most of its LNG from the U.S. on a spot basis.”

China announced Tuesday a 10 percent tariff on American goods, including LNG, starting Sept. 24 in retaliation for a similar-sized levy imposed by the U.S. While China struck below the 25 percent duty it threatened last month, the ongoing trade tensions are seen turning off buyers in China, the world's biggest and fastest-growing natural gas market.

That could go for both taking individual, or so-called spot, cargoes, as well as tying themselves to projects with long-term spending and supply commitments in the U.S., where more than a dozen projects are seeking about $139 billion in investments.

“For a Chinese buyer, the overall risk profile for procuring U.S. LNG remains heightened,” Saul Kavonic, Credit Suisse Group AG's director of Asia energy research, said by email. “Even with a smaller tariff, there has likely been some longstanding damage done to the perception of reliability of U.S. LNG supply in the eyes of Chinese buyers who will shape the next wave of global LNG projects.”

U.S. LNG sales are linked to the nation's benchmark Henry Hub gas price, which is down about 1 percent this year, while supply from most other exporters is tied to oil, which has gained 18 percent over that period. That's made American fuel cheaper than other sources, an advantage that's being eroded by tariffs.

China may shift its buying from the U.S. to other exporters, including Qatar and Papua New Guinea, according to Bloomberg Intelligence analysts Lu Wang and Kunal Agrawal. There is about 103 million tons a year of aggregate capacity in new LNG plants near final investment decisions in those countries, along with Russia, Nigeria and Mozambique, that benefit from the tariffs, Goldman said.

Prospective U.S. projects will likely seek to work out deals with non-Chinese buyers, making it more difficult but not impossible to reach investment decisions, Barclays Plc analyst Samuel Phillips said in a Sept. 19 report.

PetroChina Co. signed a deal earlier this month with Qatargas Operating Co. to purchase 3.4 million tons of LNG annually, the Chinese company's biggest supply deal, while inking a mid-term contract with the PNG LNG project earlier this year. PetroChina's parent, China National Petroleum Corp., signed a deal to buy U.S. LNG from Cheniere in February. CNPC didn't respond to requests for comment.

— With assistance by Aibing Guo, Jing Yang, and Sarah Chen

_________________________

Story by Stephen Stapczynski and Dan Murtaugh from Bloomberg News.

bloomberg.com 09 19 2018

_________________________

We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com

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

Any question or suggestions,
please write to: editor@petroleumworld.com

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

 

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep/
Contact Email: editor@petroleumworld.com

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: http://www.law.cornell.edu/uscode/17/107.shtml. 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.