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Chinese tariffs on US gas exports may shift the global market

10 August 2018
Consumers
energynomics

China’s threats of new tariffs on $60 billion worth of U.S. imports will create shifts in the energy market, as American liquefied natural gas makes the list of goods Beijing will target, analysts said, according to CNBC. If implemented, China’s proposed 25 percent tariff on U.S. LNG will cause shifts in the LNG market.

China is the number 2 importer of LNG globally while the U.S. is climbing up the ranks of major LNG exporters.

The move to include LNG raised eyebrows as China had previously held back at including the fuel on the list of products subject to tariffs. That is as the country looks to natural gas as part of its efforts to clean up politically sensitive air pollution.

But things have changed since trade tensions with the U.S. escalated dramatically in recent weeks and some have questioned if Beijing’s move will hit American gas exports.

If implemented, a tariff on LNG “would deal a serious blow to the U.S. gas industry and President (Donald) Trump’s ‘energy dominance’ agenda,” said Hugo Brennan, senior Asia analyst at consultancy Verisk Maplecroft.

“Chinese gas demand forecasts are underpinning a raft of proposed LNG export terminals along America’s East Coast, which align with the Trump administration’s bid to turn the U.S. into an energy superpower. But some of these projects will struggle to attract financing if (China) goes ahead and raises tariff barriers on U.S. LNG,” Brennan wrote in a Tuesday note.

China was the world’s second-largest importer of LNG last year. The country is expected to become the world’s top importer of the super-chilled fuel next year, the International Energy Agency said in June. Last year, about 15 percent of U.S. LNG exports went to China.

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