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US LNG exports to China resuming thanks to tax waivers
US-CHINA
Four tankers are reportedly already on the way to China after loading cargoes in the US.
SHIPMENTS of US LNG to China are resuming after Beijing has reportedly started granting tax waivers to certain importers of the super-chilled fuel, according to shipping and trade sources cited by Reuters.
The news service reported on April 7 that four tankers were currently on their way to China after loading cargoes in the US last month, according to data from Refinitiv and Kpler. The data show that these tankers are due to arrive in China between late April and early May.
All four of the tankers are thought to be head- ing to Tianjin, where China National Offshore Oil Corp. (CNOOC) and Sinopec operate LNG import terminals. One of the tankers loaded its cargo from Cameron LNG in Louisiana, two from Sabine Pass, also in Louisiana, and one from Corpus Christi LNG in Texas.
This marks the first time since April 2019 that cargoes of US LNG have been shipped to China. Beijing imposed a 10% tariff on imports
of US LNG in September 2018 as the trade war between the two countries escalated. The tariff rate was raised to 25% in June 2019, and while some LNG trade had initially continued, fol- lowing the tariff increase Chinese companies stopped buying US cargoes of the fuel.
China announced in February 2020 that it would start granting exemptions to tariffs on certain US goods. This followed a prelimi- nary deal that was agreed between Beijing and Washington. Under this Phase 1 deal, China was supposed to dramatically ramp up purchases of US energy over 2020-21, but the coronavirus (COVID-19) pandemic has slowed progress towards this target.
Details on the companies that have received exemptions on the tariffs so far have not emerged, but Reuters cited two China-based sources as saying the tariff has dropped to zero, though a separate value-added tax of 10% still applies.
Cheniere seeks regulatory approval to start Midship pipeline
OKLAHOMA
US LNG producer Cheniere Energy has filed a request with federal regulators to begin service on its newly completed Midship pipeline from Oklahoma’s Anadarko Basin.
According to the filing, Cheniere is asking the US Federal Energy Regulatory Commission (FERC) for permission to bring the pipeline into service “at the earliest time possible, but no later than April 17, 2020, in order to meet the needs of its shippers”. The move comes amid expec- tations that shale drillers in regions such as the Anadarko will scale back drilling owing to the collapse in oil prices. Meanwhile, Cheniere itself is thought to be considering cutting output at its two LNG terminals.
However, when the Midship pipeline was first proposed, producers in the Anadarko Basin were calling for new takeaway capacity to accommodate growth from the South-Cen- tral Oklahoma Oil Province (SCOOP) and the Sooner Trend Anadarko Basin Canadian and Kingfisher (STACK) Counties plays.
The $1bn Midship pipeline is designed to carry around 1.44bn cubic feet (40.8mn cubic metres) per day of gas from the Anadarko Basin
to existing pipelines near Bennington, Okla- homa. From there, the gas will be transported on to markets on the Gulf Coast and the Southeast, boosting Cheniere’s feed gas supply at its termi- nals in Louisiana and Texas. About 925mn cubic feet (26 mcm) per day of the pipeline’s capacity has been contracted for firm service, according to filings with the FERC.
Cheniere started construction on the pipe- line in February 2019. The project faced some delays during construction, including because of weather, and began commissioning in Febru- ary this year.
As well as being the US’ leading LNG exporter, Cheniere has also become the coun- try’s largest consumer of natural gas. It now has five liquefaction trains in operation at its Sabine Pass LNG terminal in Louisiana, as well as a sixth under development. At Corpus Christi LNG in Texas, the company has two trains in service and a third under construction, as well as a plan for an additional expansion phase. However, the market downturn and global glut of LNG may slow development of further lique- faction capacity.
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w w w . N E W S B A S E . c o m Week 14 09•April•2020
