Chinese tariffs on LNG, oil may hit U.S. bid for energy dominance
S E E D E D C O N T E N T
FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee/File Photo
NEW YORK/BEIJING (Reuters) - China’s targeting of U.S. liquefied natural gas and crude oil exports opens a new front in the trade war between the two countries, at a time when the White House is trumpeting growing U.S. energy export prowess.
China included LNG for the first time in its list of proposed tariffs on Friday, the same day that its biggest U.S. crude oil buyer, Sinopec, suspended U.S. crude oil imports due to the dispute, according to three sources familiar with the situation.
On Friday, China announced retaliatory tariffs on $60 billion worth of U.S. goods, and warned of further measures, signaling it will not back down in a protracted trade war with Washington.
That could cast a shadow over President Donald Trump’s energy dominance ambitions. The administration has repeatedly said it is eager to expand fossil fuel supplies to global allies, while Washington is rolling back domestic regulations to encourage more oil and gas production.
The U.S. is the world’s largest exporter of fuels like gasoline and diesel, and is poised to become one of the largest exporters of LNG by 2019. China is the world’s biggest crude oil importer.
China had curtailed its imports of U.S. LNG over the last two months, even before its formal inclusion in the list of potential tariffs. It had also become the largest buyer of U.S. crude oil outside of Canada, but Kpler, which tracks worldwide oil shipments, shows crude cargoes to China have also dropped off in recent months.
It comes at a time when the United States has several large-scale LNG export facilities under construction, and after Trump’s late 2017 trip to China that included executives from U.S. LNG companies.
“The U.S. gas industry will be much harder-hit by this as China imports only a small volume whereas U.S. suppliers see China as a major future market,” said Lin Boqiang, professor on energy studies at Xiamen University in China.
China became the world’s second biggest LNG importer in 2017, as it buys more gas in order to wean the country off dirty coal to reduce pollution.
China, which purchased almost 14 percent of all U.S. LNG shipped between February 2016 and May 2018, has taken delivery from just one vessel that left the United States in June and none so far in July, compared with 17 during the first five months of the year.
(For an interactive graphic on U.S. LNG shipments to China, see tmsnrt.rs/2n9bQKn )
Meanwhile, according to Kpler, crude exports to China dropped to an estimated 226,000 barrels per day (bpd) in July, after reaching a record 445,000 bpd in March. Sinopec, through its Unipec trading arm, is the largest buyer of U.S. crude.
With LNG demand expected to skyrocket over the next 12 to 18 months, there are still some two dozen firms seeking to build new LNG export terminals in the United States and tariffs may limit their ability to secure sufficient buyers to finance their proposed projects.
U.S. LNG “producers will try to move to other locations,” said Dominick Chirichella, director of risk management, trading and advisory services at EMI DTN in New York, noting there will likely be a “big push” to places like Europe and Japan.
“It’s tough to say whether that would offset the loss of LNG from China, so until producers get reorganized, it could slow down some of the exports,” he said.
Reporting by Scott DiSavino and Aizhu Chen; Additional reporting by Jessica Resnick-Ault and Andres Guerra Luz in New York, Collin Eaton in Houston and Josephine Mason in Beijing; Writing by David Gaffen; Editing by Chris Reese
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In just over a year China went from purchasing $200 million of fuel per month to $1 billion from the US.
Interesting development.
What's your take on it?
sounds like hands are getting lubed
possibly
with some friction defying lubricant
yet
fibrous in origin
Asia, specially China has become the largest importer of fuel in the world. And it will continue to grow. The summit that the US pulled out of on climate change the Chinese took very seriously and are moving out of coal into natural gas at a very fast pace. (the largest market in the world for EV)
In addition to what China produces itself (it's the 6th largest oil producer in the world) it has long term contracts with Russia and a few other countries and is building a pipeline from Myanmar to China for natural gas...
The US is still a bit short on infrastructure, export LNG terminals, but have 3 more under construction now.
China is and will be the largest market in the world for all forms of energy and the US could really tighten up the balance of trade just with energy exports to China.
China wasn't even talking about this a short time ago. To me it shows that they are not intimidated by tariffs the US is putting on currently.
You got it
hmmmm? I see a cut off our nose to spite our face story there.
My take? My opinion?
Little to no thought besides using radio talks show hosts and late night tv hosts as subject matter experts for decision making regarding the recent tariffs.
Isn't that the truth.
In addition China leads the world in renewable energy..Number one in most installed wind energy capacity and number two in solar capacity .
The reserves of shale oil (fracking) are on a par with the known US reserves as well.
I guess the renewable includes their hydro power.
Here is something many do not consider. We are slowly becoming more aware of environmental impacts regarding our industrialization. We have been slowly moving some areas in a direction toward better conservation and sustainability.
From what I can tell the Chinese don't give a crap, unless there is some sort of impact on national production (deadly smog killing or impeding the workforce), deaths because someone is putting a "cheapa - betta" chemical in food processing, etc.
From what I can tell they have no qualms about raping the land or seafloor or sea.
They will continue to string their pearls and do whatever is necessary to continue on their plan. Long term plan. We will continue with our weekly, monthly, quarterly and annual results reports as we continue to chase leaves in the wind.
Off the soap box.
In the past couple of years the Chinese have put a real premium on the environment especially on the smog situation and many other areas...They have a mess to clean up but they are finally addressing it and in a big way. The electric car is something that they are pushing very hard to cut down on pollution. Tesla (if they survive) is building a plant in China that is capable of producing 500,000 cars a year, all electric.
Now safety for workers isn't that good, but it's improving but not anywhere near our concern for workers safety or the rules that we have in place if the current administration doesn't EO them out of existence.
If they can stick with the environmental improvements, then good for them. Wonder if they will have similar concerns for their string of pearls and the seafloor used to build their islands?
Unfortunately, there is not much we can do either way right now, unless I am overlooking something.
Again, either way, it is like we have been asleep at the wheel for who knows how long regarding the steady growth China has pursued. Now in our slumber we decide to throw some poorly thought out tariff in the mix.
It's China, they have a seemingly endless supply of worker bees............lol.
That's true SP....But it is improving. Much like the US in the early 20th century.
That sums it up pretty well.
Chinese Tariffs On LNG, Oil May Hit U.S. Bid For Energy Dominance
key word here is: May
the world market is bigger than china.
of course they are going to kick and scream about trumps tarriffs but in the end they need us more than we need them
supply and demand.... we have the supply and they will eventually meet our demands.
Actually China is a large producer of energy in it's own right and they are the largest consumer of energy on the planet. The have pipelines from Russia to China and multi year contracts. They have completed a pipeline from Myanmar to China for natural gas and they are developing their own shale industry.
Addtionally they have exploration rights on three major oil fields in Brazil and have a supply from Equador for the next 99 years.
So, IMO, they are not dependent on the US for energy.
We'll see what happens.
We already are
they are playing Trump for the fool that he is
Most likely the more pearls they add to their string, the more of these exploration rights will happen,
The necklace is getting more and more pearls on it, dave.
China w=WILL become the leader in the world market
Population of a rapidly developing mega nation will have major global impacts
China is now the largest energy user on the planet, they surpassed the US last year.
not disputing you
stating they will be the world leader of much more
I understand, I was pointing out that China is already leader of the pack in some instances.
China Threatens New Tariffs on $60 Billion of U.S. Goods
The new threat comes after President Trump asked his administration to consider more than doubling tariffs on $200 billion a year of Chinese goods.
9h ago
By KEITH BRADSHER and CAO LI
Credit
Todd Spoth for The New York Times
Yes, the Chinese don't seem to be backing down at all.
E.A No, indeed I think this is a No Win battle, it might end up as a pyrrhic one.
“It’s more proportionate,” Mr. Tu said.
China wants to find a negotiated solution to the two sides’ trade policy differences, but also could not simply ignore President Trump’s threat earlier this week, Mr. Tu added.
How Trump’s Trade War Went From 18 Products to 10,000
The battle began when the United States imposed tariffs on solar panels and washing machines. It has led to a global tit-for-tat targeting billions of dollars of goods.
Mr. Trump ordered the Office of the United States Trade Representative on Wednesday to consider the possibility of 25 percent tariffs on $200 billion a year worth of Chinese goods. The 25 percent tariffs could be imposed in place of 10 percent tariffs that are already under discussion. Those tariffs have not taken effect, and a final decision on their size and scope is not expected until next month.
Dear Friend Kavika: A united front in the TPP would have been a more appropriate route to take in this trade dispute.
Just my take.
Not sure this will produce any winners.
E.
I agree niijii, there are never any winners in a trade war. You just hope that you don't take an fatal blow.
China will replace the US as a supplier for oil and/or natural gas with suppliers who are not friends of the US, providing income to them that sanctions dictated by the US may have considerably reduced. Who's the winner here?
Buzz, China only starting using the US Supplies recently. In one year their purchases went from $200 million per month to $1 billion and was growing. Now, IMO, the US stepped on it's own foot with the added increase in the tariffs proposed. Yeah, I think this is going to hurt us.
Another good seed, K.
I wonder if the objective is to drive a wedge between Trump and Big Oil.
... ... and the beat goes on... ...
... ... ... ... and the beat goes on... ...
I believe that it is, Bob. They have targeted all of their tariffs to specific groups/state/industries.
Here is another industry that is going to be hurt by the tariffs.
But not to worry! Our guy is playing three-dimensional chess.....