The Oz: Chinese tariffs won’t stop US gas exporter

The Australian carrying the same quotes from GV as the Platts article shared by Bluey over the weekend 34718408, but without reference to other non-Chinese destination markets ...

Chinese tariffs won’t stop US gas exporter

Paul Garvey
August 6, 2018

LNG managing director Greg Vesey. Picture: Aaron Francis.

US-focused Liquefied Natural Gas will continue to pursue offtake agreements with Chinese parties, despite China announcing plans for a 25 per cent tariff on US LNG imports.

China announced plans for the new impost on Friday as part of its latest $US60 billion ($81bn) package of retaliatory tariffs.

The news triggered a selldown in the shares of US-listed LNG players Cheniere Energy and Tellurian, with Cheniere falling more than 2 per cent and Tellurian dropping more than 5 per cent in Friday night trade.

The Houston and Perth-based LNG has been in negotiations with potential offtake partners in recent months, ahead of a planned final investment decision on its Magnolia LNG plant near Lake Charles in southwest Louisiana by the end of this year.

LNG managing director Greg Vesey said the company would continue to work with Chinese buyers in the wake of the news.

“This is positive from the aspect that we considered it part of the tariff list all along and maybe now this gets everyone to the negotiating table to find a mutually beneficial solution,” Mr Vesey said.

“Chinese buyers and US exporters want this resolved.”

LNG had previously been excluded from an earlier list of proposed tariffs, in what was seen as an indicator of the importance of cleaner-burning gas to China as it tries to tackle its pollution issues. China is one of the fastest growing LNG markets in the world and up until now has been an increasingly popular destination for US LNG exports.

According to oil and gas consultancy Wood Mackenzie, some 42 cargoes carrying an estimated 3 million tonnes of LNG were exported from Cheniere’s Sabine Pass terminal on the US Gulf Coast to China in the year to June 2018. China has become the second-biggest export market for US LNG behind South Korea.

Wood Mackenzie’s research director, global gas and LNG supply, Giles Farrer, said the tariff on US LNG exports would have significant implications for the US and China.

Mr Farrer said that while the tariffs could make it harder for new US LNG players to secure long-term contracts from Chinese customers, the charge would not be fatal given the broader international demand for LNG.

“Long-term market consequences are likely to be felt on new supply developments as it would restrict the target market for developers of new US LNG projects trying to find new long-term contracts,” Mr Farrer said.

“However, as plenty of appetite exists from other buyers in Asia and Europe for second wave US LNG projects, this is unlikely to be terminal. The first wave of US LNG projects were successful despite not signing contracts with Chinese buyers.”

News of the proposed tariff could spell the end for LNG’s recent share price momentum. Let's see if last week's aggressive insto buying pauses ... or continues in earnest ...

The company received a price query from the Australian Securities Exchange last week after the stock ran from 65.5c on Wednesday to 83.5c on Friday.

LNG recently raised $28.2 million through a placement to Hong Kong-listed IDG Energy Investment Group, which gave it a 9.9 per cent stake.

https://www.theaustralian.com.au/bu...r/news-story/53b2ba1d30058e72dd1d4331ad424184

Go LNG!!!