Donald Trump\u2019s escalating trade war with Beijing poses a significant threat to billions of dollars worth of planned US liquefied natural gas (LNG) export projects, many of which rely on China as a major buyer. Analysts, industry sources, and company filings suggest that this development could also undermine Trump\u2019s ambitions to revitalize US business and significantly expand energy production.<\/p>\n
\u201cTariffs could impact long-term contracts and purchase agreements… and make it more difficult for new US LNG projects to move towards Final Investment Decisions,\u201d analysts at energy consultancy EBW Analytics noted in a report on Tuesday, referencing Beijing\u2019s retaliatory tariffs on US energy imports.<\/p>\n
Trump\u2019s announcement over the weekend that he would impose a 10% tariff on imports from China\u2014part of his plan to improve the US trade balance\u2014prompted Beijing to retaliate by imposing a 15% tariff on US LNG and coal, as well as a 10% tariff on US oil. The US is the world\u2019s largest LNG exporter, and China has been a key buyer of the super-cooled gas, importing about 6% of total US LNG exports last year\u2014or approximately 4.3 million metric tonnes\u2014according to LSEG data.<\/p>\n
According to Reuters calculations, Chinese state-owned companies have signed LNG supply agreements for more than 20 million metric tonnes per annum (MTPA) from both existing and future US export terminals. Venture Global LNG and Cheniere, the two largest US LNG exporters, have secured long-term contracts with Chinese companies for 14 million MTPA, based on public statements.<\/p>\n
Venture Global declined to respond to requests for comment, while Cheniere and its rival Energy Transfer\u2014which has a long-term sales and purchase agreement with China\u2014were not immediately available for comment. Freeport LNG, the third-largest US LNG exporter, also declined to comment.<\/p>\n
Currently, there are eight operating LNG export terminals in the US, three under construction, and approximately 20 more in various stages of development. Companies are advancing projects for new or expanded LNG export capacity after the Trump administration lifted a moratorium on new LNG export permits in January. This moratorium had been imposed by former President Joe Biden due to concerns about the environmental and economic impacts of such projects.<\/p>\n
However, Charlie Riedl, Executive Director of the Center for LNG\u2014a trade group representing many US LNG exporters and developers\u2014warned that China\u2019s decision to impose tariffs introduces uncertainty to the industry and weakens America\u2019s competitive position in global energy markets.<\/p>\n
\u201cThese tariffs on US LNG directly undermine the Trump administration\u2019s efforts to expand American energy exports and strengthen our geopolitical influence,\u201d Riedl said.<\/p>\n
Huge contracts<\/b><\/p>\n
LNG developers rely on long-term contracts or sale and purchase agreements to secure financing from banks for their projects. These agreements are critical for moving projects from the development stage to the final investment decision.<\/p>\n
According to company filings, Venture Global\u2014the most valuable LNG exporter in the US, with two facilities operating in Louisiana and three under development\u2014has signed 9.5 MTPA supply agreements with Chinese companies to date. Cheniere Energy, the second-largest LNG company in the US and currently the largest exporter, has more than 4.5 MTPA of long-term contracts with China.<\/p>\n
In its prospectus for its blockbuster initial public offering in January, Venture Global warned investors about the potential risks posed by a trade war between the world\u2019s two largest economies. \u201cThese factors could adversely affect our ability to market the remaining production capacity of our projects, which could have a material adverse effect on the viability of our projects and our business,\u201d the company stated at the time.<\/p>\n
On Tuesday, Venture Global\u2019s shares fell nearly 5% in afternoon trading, while Cheniere\u2019s stock dropped by less than 1%.<\/p>\n","protected":false},"excerpt":{"rendered":"
Donald Trump\u2019s escalating trade war with Beijing poses a significant threat to billions of dollars worth of planned US liquefied natural gas (LNG) export projects, many of which rely on China as a major buyer. Analysts, industry sources, and company filings suggest that this development could also undermine Trump\u2019s ambitions to revitalize US business and […]<\/p>\n","protected":false},"author":1,"featured_media":7657,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[4],"tags":[6082,6085,529,319,6083,3587,6088,6086,6092,503,6087,6091,4825,6093,6089,787,821,6090,6094,6046,6084],"class_list":["post-7656","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asia","tag-beijing-tariffs","tag-cheniere-energy","tag-china","tag-donald-trump","tag-energy-production","tag-energy-sanctions","tag-energy-tariffs","tag-freeport-lng","tag-global-energy-markets","tag-headline","tag-lng-contracts","tag-lng-export-terminals","tag-lng-exports","tag-lng-financing","tag-lng-projects","tag-trade-war","tag-us","tag-us-energy-policy","tag-us-lng-industry","tag-us-china-trade-relations","tag-venture-global-lng"],"yoast_head":"\n