Woodside, page-3992

Trump Backs LNG Projects, But His Trade War Could Hurt the Stocks
-- Barrons.com20/03/2025 3:00AM
By Avi Salzman

The Trump administration's steady approvals of liquefied natural gas projects are a boon for the industry. But the president's trade war is causing problems for those same operators.On Wednesday, the Trump administration approved the fifth liquefied natural gas project in less than 60 days, giving Venture Global a green light to export gas from a Louisiana plant known as Calcasieu Pass 2.Yet, LNG stocks are lagging behind the rest of the energy sector, and President Donald Trump's tariffs look to be one reason. Chinese companies have stopped importing U.S. LNG after the Chinese government placed 15% tariffs on it, according to Bloomberg's analysis of shipping data. China is the world's largest importer of LNG. Venture Global stock jumped 9% on Wednesday morning after the administration's approval of its plant. The company has already gotten very positive attention from the White House: Two leaders of Trump's National Energy Dominance Council visiting one of its other facilities to celebrate its expansion earlier this month. Trump quickly reversed a pause the Biden administration had instituted last year on LNG export terminal approvals.But Venture Global stock has fallen dramatically this year. The company's shares are down 50% since its January initial public offering. Venture's fourth-quarter earnings report was disappointing; its results slumped largely because of a drop in LNG prices. Venture is particularly exposed to fluctuations in global LNG markets, because it's more exposed to spot pricing than some competitors, who lock in more long-term contracts. Lately, international prices of LNG have slumped, while U.S. prices of natural gas have risen. The tightening spread isn't good for companies that buy U.S. gas and sell it on international markets. The trade war isn't the main reason behind the tightening spreads -- weather, overall global supplies, and storage levels tend to matter more. But analysts have been warning that tariffs are a vulnerability for U.S. companies. "Based on past trends, we expect China to scale back U.S. LNG imports, which may not cause immediate price shocks but could shift long-term trade flows in favor of suppliers like Australia and Qatar," Rystad Energy's Emily McClain wrote last month. Some of that prediction appears to have come to pass. China hasn't bought U.S. gas for 40 days, the longest period in almost two years, according to the Bloomberg data. It has been rerouting shipments elsewhere. And China Resources Gas International just signed a 15-year LNG import contract with Australian company Woodside Energy this week, the first long-term LNG contract that Woodside has ever signed in China. Cheniere Energy, the largest U.S. LNG exporter, is less exposed than Venture Global to the day-to-day fluctuations in prices, because it signs more long-term contracts. Its stock has risen 2% this year. But that's still less than the 6% gain for the Energy Select Sector SPDR exchange-traded fund. Trump has made LNG exports one of the most important bargaining chips in trade talks in recent weeks. And it could still pay off for the operators in the near term, if trade deals are signed that lead to more U.S. exports. But for now, trade tensions are working in the opposite direction. It's another sign that U.S. energy is more exposed than ever to a trade war.