Page 4 - GLNG Week 42 2021
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GLNG                                          COMMENTARY                                               GLNG




       China seeks more US LNG







       Chinese natural gas importers are once more ramping up their

       purchases from US suppliers as the country battles an energy

       crunch in the run-up to the peak winter demand season



        POLICY           US LNG supplier Venture Global LNG has offi-
                         cially joined compatriot Cheniere Energy in hav-
       WHAT:             ing closed a long-term supply deal with Chinese
       Chinese buyers have   buyers.
       signed term contracts   It emerged this week that Venture Global
       with Venture Global LNG   had signed two 20-year offtake contracts with
       and Cheniere Energy.  China’s state-run Sinopec on September 1 for
                         a combined 4mn tonnes per year (tpy) of sup-
       WHY:              ply. Venture Global disclosed the deal to the US
       China is increasingly   Department of Energy (DOE) on October 1,
       turning to US LNG supply   with the DOE then publishing that information
       amid a surge in global   on October 19.
       prices.             The contracts – one for 2.8mn tpy and the
                         other for 1.2mn tpy – will be fulfilled by Venture                       Venture Global is
       WHAT NEXT:        Global’s proposed 20mn tpy Plaquemines LNG  Gas. This was the first major US-China LNG   preparing to start up
       Chinese demand for gas   facility in Louisiana.        deal since 2018 and illustrates how US LNG is   one liquefaction plant in
       will continue to soar   The news comes after Cheniere’s announce-  becoming increasingly attractive to Chinese   Louisiana and sanction
       as the country strives   ment last week that it had closed a term supply  buyers.          a second.
       to slash emissions this   deal with privately owned ENN Natural Gas as   Reuters cited traders as saying that a deal sim-
       decade.           well as recent media reports that both Venture  ilar to ENN’s, at $2.50 plus 115% of Henry Hub
                         Global and Cheniere were in talks with several  futures, would work out as roughly about $9-10
                         Chinese Energy over new long-term supply  per mmBtu ($248.94-276.60 per 1,000 cubic
                         deals.                               metres) on a delivered basis into Northeast Asia.
                                                              This would include an average shipping cost of
                         Trade talk                           $2 per mmBtu ($55.32 per 1,000 cubic metres)
                         Citing several sources familiar with the matter,  for LNG travelling from the US to China.
                         Reuters said last week that the “advanced” talks   Reuters cited consultancy Poten & Partners’
                         involved at least five Chinese companies, includ-  global head of business intelligence, Jason Feer,
                         ing state-owned Sinopec and China National  as saying Chinese companies were heavily
                         Offshore Oil Corp. (CNOOC), as well as local  exposed to Brent-related pricing for LNG and
                         government-backed energy distributor Zhejiang  that US purchases offer some pricing diversity.
                         Energy.                               Cheniere had said in late September that it
                           The newswire said the discussions were  expected to announce “a number” of transac-
                         mainly being held with leading US LNG pro-  tions, so other deals appear set to follow.
                         ducer Cheniere, as well as Venture Global,   Both the news about the Venture Global and
                         which is preparing to bring its first liquefaction  Cheniere deals as well as reports of ongoing sup-
                         plant – the 10mn tpy Calcasieu Pass project  ply talks come as US-China LNG trade booms
                         – online.                            after having briefly stopped in 2019-2020 owing
                           One of Reuters’ sources said Sinopec alone  to their escalating trade war.
                         was looking to buy up to 4mn tpy, as it is more
                         exposed to the spot market than its domestic  Geopolitical thaw
                         rivals; this speculation has been borne out by  Shipments of US LNG to  China resumed
                         the DOE’s recent announcement.       in March 2020 and hit a new record high of
                           The news service also cited traders as saying  46.8bn cubic feet (1.3bn cubic metres) in April
                         Sinopec was in final-stage talks with three or  2021, according to the US Energy Information
                         four companies to buy 1mn tpy over a 10-year  Administration (EIA), which has published data
                         period, with some of these volumes potentially  up to July so far.
                         coming from the US.                   Indeed, previous talks between Sinopec and
                           The Reuters report came after Cheniere said  Cheniere over a long-term supply deal fell apart
                         last week that it had struck a 13-year deal to sup-  as a result of the trade war and the collapse in
                         ply LNG to China’s privately owned ENN Natural  LNG spot prices that happened around the same



       P4                                       www. NEWSBASE .com                        Week 42   22•October•2021
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