Page 7 - NorthAmOil Week 40

NorthAmOil COMMENTARY NorthAmOil
up to July – the latest month for which data are available – the agency shows China only import- ing US LNG in January, February and April, with zero imports in the other months. What little imports there have been in the year up to July amount to roughly 10.6 bcf (299 mcm) accord- ing to the EIA – just over a tenth of total 2017 volumes.
Yet LNG trade between the two countries makes sense, given that China is on course to become the world’s leading buyer of LNG, while the US has been forecast to become the largest exporter globally, both within five years. As a result, some companies have continued talks with an eye to future deals once trade tensions have been resolved. In March, it was reported that leading US LNG exporter Cheniere Energy and China’s Sinopec were planning to sign a 20-year supply agreement once the trade war between the two countries is over.
Resolution in sight?
New talks aimed at ending the dispute are set for this month, but relations between Beijing and Washington have been volatile this year and there is no certainty of a resolution any- time soon. On the other hand, US President Donald Trump may be in need of a victory to divert attention from the impeachment inquiry that was launched against him by Speaker of the House of Representatives Nancy Pelosi last week.
“The political mess may now encourage Pres- ident Trump to accept an imperfect deal with China,” foreign exchange brokerage FXTM’s chief market strategist, Hussein Sayed, wrote in a recent report. “After all, he needs to prove that
he’s the master of deal-making, and now is the right time to raise his approval rating higher.”
Sempra’s MoU could thus be a sign that some companies are already anticipating an end to the US-China trade war and are trying to be among the first in line when Chinese companies start signing new supply deals.
“This initial agreement with CTG represents an opportunity to support strong growth in nat- ural gas demand in Asia, with future expansions of our LNG projects right here in North Amer- ica,” said Sempra’s chairman and CEO, Jeffrey Martin.
Sempra recently brought the first train at its Cameron LNG export terminal in Louisi- ana online. The facility will have a capacity of 14.95mn tonnes per year (tpy) once all of its three trains are operational. The company is also proposing to build another LNG export plant at Port Arthur, Texas. It has approval from the US Federal Energy Regulatory Commission (FERC) to build the two-train facility, which will have a capacity of roughly 11mn tpy. An offtake agreement has also been struck with Poland’s PGNiG for 2mn tpy of LNG from the facility over a 20-year period starting in 2023. However, Sempra still needs to find more buyers, at a time when a lack of Chinese interest is leading some US LNG exporters to delay final investment decisions (FIDs) on new facilities.
The MoU with CTG could thus be a step in the right direction for a US LNG industry seeking more buyers. Definitive agreements are unlikely to come until a US-China deal is finalised, but recent events suggest there is now more optimism over this happening in the near future.™
A lack of Chinese interest is leading some US LNG exporters to delay final investment decisions on new facilities.
Sempra recently brought the first train at its Cameron LNG export terminal in Louisiana online and is seeking buyers for its proposed Port Arthur project in Texas.
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