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under construction on the Gulf Coast – the main progress towards a goal that seemed out of
US LNG hub. Venture Global LNG’s Calcasieu reach from the beginning.
Pass terminal is scheduled for start-up in 2022, Nonetheless, the Phase 1 deal revived hopes
while Qatar Petroleum (QP) and ExxonMobil’s that Sinopec would strike a 20-year supply agree-
Golden Pass LNG is expected to enter service in ment with Cheniere Energy, after the two com-
2024. panies had previously been reported to be close
These capacity additions will further support to a deal that was derailed by the trade war.
the US’ LNG dominance, but only if price differ- In January, it was reported that the companies
entials are favourable enough to justify exports were planning to review the terms of a potential
to Asia and Europe – or elsewhere. deal after LNG prices fell to new lows in Asia.
Earlier this year, China started granted tar-
Chinese whispers iff waivers to buyers of US LNG in a bid to help
Meanwhile, it was reported last week that Chi- them ramp up imports, and this was also wel-
na’s state-run Sinopec was seeking 1mn tpy of comed as progress towards a full resumption of
LNG for delivery over a 10-year period from US-China LNG trade.
2023 in a bid to take advantage of the current However, a report published this week by the
low prices. Long-term deals have been rel- Institute for Energy Economics and Financial
atively rare recently, so the fact that buyers Analysis (IEEFA), a think-tank, has expressed
are still open to them could boost hopes for scepticism over the likelihood of China coming
new liquefaction capacity plans that are still to the rescue of US LNG exporters.
awaiting final investment decisions (FIDs). One of the report’s co-authors, Clark Wil-
However, in an oversupplied market, the liams-Derry, said in a statement that if China is
negotiating advantage appears to lie with the to expand its LNG imports, it would likely seek
buyer, and sellers may have to settle for lower to secure long-term supplies at prices well under
prices than they would have liked. $7 per million British thermal units ($193.62
The report about Sinopec came from Reuters, per 1,000 cubic metres). But the report’s authors
which cited six industry sources. Offers were concluded that even with US costs close to his-
reported to be due by July 31. One of the sources torically low levels, the margin for reaching such
said Sinopec was also looking for volumes from low prices is slim.
the US as part of the tender requirement. “The most optimistic LNG demand scenar-
This comes as China is under pressure ios are simply unrecognisable to experienced
to buy more US energy in order to meet analysts of the Chinese energy sector,” said
its commitment under the Phase 1 agree- Williams-Derry. “Even if China expands its gas
ment reached by the two countries earlier use, the country will likely find cheaper sources
this year as they seek to end their trade war. of gas than US imports, including domestically
However, a demand drop resulting from produced gas, pipeline imports and LNG from
COVID-19 has severely hampered China’s lower-cost global suppliers.”™

Week 31 06•August•2020 www. NEWSBASE .com P5