Trade with China likely to see a boost in the purchase of LNG

Bloomberg:
China’s appetite for U.S. liquefied natural gas may be about to get a lot bigger after the two nations agreed to pull back from the brink of a trade war.

If China makes a substantial commitment to buying U.S. LNG, it could bring $30 billion back into the country, according to a Height Securities LLC report on Monday. The White House said May 19 that China will “significantly increase purchases” of U.S. goods, while Beijing’s special envoy said the world’s two largest economies had agreed to a trade truce.

“China represents an enormous economic opportunity for U.S. LNG,” Katie Bays, an analyst at Height in Washington, said in a note to clients Monday. The fuel “will likely see dramatic demand growth in the coming years, during which time the U.S. is also expected to dominate global export markets.”

China represents a massive opportunity for U.S. shale gas, with the nation set to become the world’s largest LNG importer in the next decade as it switches to the cleaner-burning fuel from coal.

Already, China is the third-biggest buyer of LNG from Cheniere Energy Inc’s Sabine Pass terminal in Louisiana, and it is poised to nab more cargoes from U.S. shores as developers seek to build new export plants from the Gulf Coast to Alaska.

U.S. LNG “makes sense from a Chinese point of view as well because they are experiencing very strong demand for gas as part of their efforts to improve air quality, and there are limited options for them,” Jason Feer, the head of business intelligence at Poten & Partners in Houston, said in an email.
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This is just one of the ways China can reduce its huge trade surplus with the US.  Another way would be increased purchases of agriculture products.

Comments

  1. Chinese tankers are already off shore in Texas, Louisiana, the more dependent China becomes on US exports of natural, Gas oil the better. Get some of money we spend there back.

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