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Natural Gas May 14, 2019 01:43:29 AM

U.S. Liquefied Natural Gas Shipments to China Face Mounting Tariffs

Anil
Mathews
OilMonster Author
On Monday, China said it would boost the tariff on U.S. LNG to 25% starting June 1 versus the current rate of 10%.
U.S. Liquefied Natural Gas Shipments to China Face Mounting Tariffs

SEATTLE (Oil Monster): China said on Monday it would raise tariffs on liquefied natural gas (LNG) imports from the United States amid a series of additional levies, a move that could further reduce U.S. LNG shipments to the world’s fastest growing importer of the fuel.

So far this year, only two LNG vessels have gone from the United States to China, versus 14 during the first four months of 2018 before the start of the 10-month trade war.

On Monday, China said it would boost the tariff on U.S. LNG to 25% starting June 1 versus the current rate of 10%.

That move came in retaliation for a U.S. increase on Friday in tariffs on $200 billion in Chinese goods to 25% from 10%.

Between February 2016, when the United States started exporting LNG from the Lower 48 states, and July 2018, when the trade war started, China was the third biggest purchaser of U.S. shipments of the supercooled fuel. So far this year, China is not even in the top 15.

“I expect they will have a hard time landing a tanker carrying U.S. LNG in China if they impose a 25 percent tariff on it,” said Jack Weixel, senior director at IHS Markit’s PointLogic analytics arm.

Stephen Comstock, a director at the American Petroleum Institute, which represents the oil and gas industry, said the retaliatory tariffs “dampen the prospects for the growing U.S. LNG investment, hurt U.S. workers, and benefit America’s foreign competitors.”

Natural gas is seen as a bridge fuel between current worldwide use of much dirtier coal for power generation and industrial consumption, and renewable fuels, because it burns cleaner. It has seen massive growth in sales in recent years, particularly to Asian nations seeking to reduce their dependence on coal.

The United States, meanwhile, is the fastest-growing LNG exporter in the world, and is expected to rank third in exports in 2019 behind Qatar and Australia. China is the second biggest LNG importer in the world behind Japan.

Courtesy: www.reuters.com


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