Page 11 - AsianOil Week 32
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A Wood Mackenzie senior analyst, Alex Munton, warned on a recent webinar for the consultancy that the trade war will a ect the fur- ther expansion of US LNG supply capacity.
“ e longer the dispute rumbles on, the more downside there is with respect to US-China LNG trade,” he said. “In the event of a resolution, it’s all upside.”
China is projected to become the biggest US LNG importer globally by around 2024, but since the start of the trade war, shipments to the Asian country from the US have fallen dramati- cally. According to the EIA, China imported 103 bcf (2.9bn cubic metres) of US gas in 2017, with this number falling to 90 bcf (2.6 bcm) in 2018. e agency’s data for 2019 so far show China as having only imported 18 bcf (499 mcm) of Chi- nese gas between January and May. And zero gas exports to China were recorded in March and May. Since China imposed tari s on US LNG in September 2018, shipments of gas from the North American country have accounted for only 1% of its imports, down from 7% in the first half of 2018. At the same time, Chinese
customers have stepped back from pending LNG deals, with only Cheniere having recently secured a long-term agreement to supply LNG to a Chinese buyer, state-owned China National Petroleum Corp. (CNPC).
Earlier this year, China’s Sinopec was also rumoured to be ready to sign an agreement with Cheniere once the trade war has been resolved. However, no resolution is in sight just yet, and indeed, tensions have been mounting between the two countries recently. US President Donald Trump’s threat of a new wave of tari s on Chi- nese goods last week brought an end to a truce between the countries, with Beijing announcing retaliatory measures and allowing its currency to depreciate against the US dollar.
is spells bad news for US LNG players try- ing to secure sufficient buyers to proceed with new export terminals. One FID has recently been announced, by ExxonMobil and Qatar Petroleum (QP) on the Golden Pass LNG project. Several other players, meanwhile, have pushed back dead- lines for FIDs, and more such moves will likely be made while the trade war continues.
MOL-COSCO deal challenges South Korean LNG shipbuilding lead
PROJECTS & COMPANIES
MITSUI OSK Lines (MOL) and China Ocean Shipping Co.’s (COSCO) recent team-up could help to erode the lead South Korean shipyards enjoy in terms of LNG vessel orders.
Japan and China are expected to award more LNG ship orders to domestic yards in an e ort to catch up with their South Korean rivals, e Korean Times quoted unnamed industry o - cials as saying on August 14.
MOL and COSCO signed a memoran- dum of understanding (MoU) last week to co-operate in new and existing LNG and ethane carrier projects. The Korean Times said the agreement would likely see MOL transfer its LNG shipbuilding technologies to Chinese dockyards.
MOL and COSCO have already worked together on various projects over the last decade, including the Australia Paci c LNG (APLNG) and Yamal LNG projects.
“A er the two sides strengthen ties, they will likely funnel their LNG vessel orders into Chi- nese and Japanese shipbuilders, so they can catch up with Korean shipbuilders, which excel in building LNG carriers,” an o cial at a domestic shipbuilder told the paper.
South Korea’s shipbuilders have come to dominate the LNG tanker market, with Samsung Heavy Industries (SHI), Daewoo Shipbuilding & Marine Engineering (DSME) and Hyundai Heavy Industries (HHI) winning 66 out the world’s 76 LNG carrier orders in 2018.
“[South] Korea became the powerhouse in LNG shipbuilding a er the country expanded its natural gas reliance in the 1990s, and China is now following in its footsteps,” a senior research fellow at the Korea Export-Import Bank’s Over- seas Economic Research Institute, Yang Jong- seo, told the daily.
“Since 2017, China has been importing more LNG than Korea and replacing its coal power plants with LNG plants. To cope with its own LNG demand, China will ramp up its shipbuild- ers’ capacity to build LNG vessels.”
South Korean shipbuilders won 21 of 27 orders in the first half of 2019 for LNG car- riers capable of carrying more than 170,000 cubic metres, according to market tracker Clarksons Research. Yang said South Korea’s shipbuilders would likely win 50 of an antic- ipated 80 vessel orders in the second half of this year.
Week 32 14•August•2019 w w w . N E W S B A S E . c o m P11
