China Love for U.S. Gas Begins as Trump Rolls Out Red Carpet

Let the gushing begin.

After an executive from U.S. liquefied natural gas exporter Cheniere Energy Inc. spoke to a few hundred people at a conference in Beijing last week, the first question from the audience turned out to be an invitation to visit one of China’s biggest energy firms and a main LNG buyer, the state-owned giant known as Sinopec.

“We are very happy to always come to your office, Mr. Chen Bo, and discuss the supply of U.S. LNG to China,” Andrew Walker said in front of an amused audience, responding to the chief of Sinopec’s trading arm.

But with oil prices currently depressed, U.S. LNG imports have no cost advantage, said Ye Yishu, president of China National Offshore Oil Corp.’s gas and power trading arm. American gas may present a buying opportunity if crude rises above $70 a barrel, he said at the summit.

Options for China to secure U.S. LNG may include buying spare volumes from Cheniere’s Sabine Pass export terminal in Louisiana, which is currently the only U.S. exporter outside Alaska, financing an expansion of that project, or buying into one of a handful of new developments that have permission to export but still need financing, according to Wood Mackenzie’s Shanks.

China oil explorers aren’t the only ones being lured by cheap plentiful reserves and the possibility of greater sales from North America. Qatar Petroleum International Ltd. has teamed up with Exxon Mobil Corp. to build a $10 billion natural gas export plant in Texas, which won approval by federal energy regulators in December.

“We get asked a lot ‘Is there an unwritten rule that Chinese buyers can’t buy from the U.S.?’ and this clearly laid out the words ‘We welcome Chinese purchases,”’ Cheniere’s Walker said of the recent trade deal. “We very much look forward to continuing our conversations with our various potential customers.”

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us