Trade War media, page-718

Growing trade war with China could hurt growing US LNG industry and consumers

API have issued the following statement in response to China’s increase of the retaliatory tariffs on US$60 billion worth of US products, including US LNG.

“The US and China have a natural supply-demand match when it comes to energy, but China’s increase of retaliatory tariffs to 25% poses a threat to US investment in LNG by limiting our share in the world’s fastest growing LNG market,” said Stephen Comstock, API Director.

“These retaliatory tariffs dampen the prospects for the growing US LNG investment, hurt US workers, and benefit America’s foreign competitors".

“Studies show that the US-China trade dispute is hurting US economy and consumers. We urge both negotiating parties to quickly implement a comprehensive trade deal that would eliminate these damaging tariffs, so that American businesses and families can stop paying for this trade war.”

Wood Mackenzie discusses US-China trade war

Wood Mackenzie has released a statement discussing the US-China trade war and its consequences for the LNG market.

Last week, the US increased tariffs on Chinese imports. Today, China has announced that it will assess a 25% tariff on US LNG as of 1 June this year. This is an increase from the 10% level instituted in September last year.

Wood Mackenzie says that its views on the tariff impacts are mostly unchanged from its previous analysis. In August, which is when the tariffs were initially announced, the consultancy noted that the tariffs would have different impacts on short-term trade than on long-term trade. Wood Mackenzie clarified this stance when the tariffs were introduced, specifically noting that there would be limited disruption in the short-term. Market activity since then has lent support to these views.

In the short-term, Wood Mackenzie claims that just four cargoes have been delivered to China from the US since the tariffs were put in place. This compares to 35 cargoes in the previous September – April period. Reportedly, this is despite over 30% growth in both Chinese LNG imports (32%) and US exports (38%) over the same periods.

The consultancy goes on to say that, going forward, strong supply growth continues to outpace growth in key markets through next year. Global supply markets will reportedly increase by 38 million tpy this year, and by another 30 million tpy next year. Pacific markets, meanwhile, will only grow by 12 million tpy this year, and 16 million tpy this year.

Wood Mackenzie says that this market length creates flexibility to both redistribute and optimise tradeflows, particularly as the US is one of China’s more distant sources of LNG.

The consultancy claims that the increase from 10% to 25% could decrease flows to China even further.

Nevertheless, it goes on to say that the absolute value of the tariff is partially offset by falling spot prices in Asia – from over US$10/million Btu when originally introduced to closer to US$5.50/million Btu today.

In the long-term, however, Wood Mackenzie has a slightly different view.

The last long-term contract agreed between a US seller and a Chinese buyer was last year before the trade war began (PetroChina’s 25-year SPA with Cheniere).

Since then, China has announced a number of SPAs and HOAs with companies from the rest of the world, such as in Mozambique, Canada and Qatar. An on going trade war between the two nations will continue to lead to hesitancy on Chinese buyers’ part to sign up for new long-term contracts.

Cameron LNG begins production

Sempra Energy has announced that Cameron LNG has begun producing LNG from the first liquefaction train of the Cameron LNG export project in Hackberry, La.

“Reaching this important milestone of first LNG production is truly a credit to the team at Cameron LNG and the work they’ve done to reach this point,” said Lisa Glatch, chief operating officer of Sempra LNG and board chair for Cameron LNG.

“Cameron LNG expects to load cargoes in the coming weeks – another major step forward to bringing cleaner, affordable energy to global markets.”

Cameron LNG completed all major construction activities for Train 1 of the liquefaction-export project and began the commissioning and start-up process in November 2018. Last month, the facility began receiving gas flow for testing as it reached the final stage of the commissioning process.

Phase 1 of the Cameron LNG export project includes the first three liquefaction trains that will enable the export of approximately 12 million tpy of LNG.

Cameron LNG is jointly owned by affiliates of Sempra LNG, Total, Mitsui & Co., Ltd., and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha (NYK). Sempra Energy indirectly owns 50.2% of Cameron LNG.

Cameron LNG Phase 1 is one of five LNG export projects Sempra Energy is developing in North America.

The other projects include Cameron LNG Phase 2, previously authorised by the US Federal Energy Regulatory Commission (FERC), which could include up to two additional liquefaction trains and up to two additional LNG storage tanks; Port Arthur LNG in Texas, which recently was approved by the US FERC; and Energía Costa Azul (ECA) LNG Phase 1 and Phase 2 in Mexico.


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