Page 7 - NorthAmOil Week 31

NorthAmOil COMMENTARY NorthAmOil
enter service in the Lower 48 states, and is now the US’ largest, with ve 700mn cf (20 mcm) per day trains in operation and a sixth under con- struction. Re nitiv data showed that because of the maintenance on Trains 3 and 4, the total amount of gas owing to all of the US’ export terminals fell to 4.1 bcf (116 mcm) per day on August 4 from around 6.0 bcf (170 mcm) per day the previous week.
Operator Cheniere Energy did not say how long it would take for the trains to return to ser- vice. However, work on Trains 1 and 2 at Sabine Pass earlier this year lasted around three weeks, with the company saying this was “a good general guide for timing” of the current turnarounds.
Warnings
As the nal facilities that make up the rst wave of US LNG exports start up, the industry is already looking to the second wave to continue the momentum. However, a lull in nal invest- ment decisions (FIDs) means that while exist- ing facilities can be expanded relatively quickly, new plants will take some years to be built. In addition, not all of the currently proposed – or approved – projects will ultimately be built, and the US-China trade war is adding to jitters over the ability of new developments to secure cus- tomers and nancing.
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 rst half of 2018. At the same time, Chinese custom- ers have stepped back from pending LNG deals, with only Cheniere having recently secured a long-term agreement to supply LNG to a Chi- nese buyer, state-owned China National Petro- leum 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 trying to secure su cient 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, mean- while, have pushed back deadlines for FIDs, and more such moves will likely be made while the trade war continues.™
The US-China trade war
is adding to jitters over the ability of new developments to secure customers and nancing.
Cheniere is currently carrying out planned turnarounds at Trains 3 and 4 of its Sabine Pass terminal.
Week 31 08•August•2019 w w w . N E W S B A S E . c o m
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