By David Stanway and Meng Meng
SHANGHAI (Reuters) – Shipments of liquefied natural gas (LNG) from the United States to China will increase over the long term despite ongoing trade tensions, senior executives of Cheniere Energy, the biggest U.S. exporter of the super-chilled fuel, told Reuters.
“It’s clear that the U.S. LNG trade with China is just beginning because U.S. LNG has just started,” Cheniere Vice President Robert Fee told Reuters on the sidelines of the LNG2019 conference in Shanghai on Thursday.
“U.S. LNG to China will increase and that will happen organically. We are thinking long-term and Chinese demand is long-term.”
Cheniere has delivered 62 cargoes of LNG to China since first starting exports from February 2016, Fee said.
So far this year only three cargoes of U.S. LNG have been delivered into China, compared with 16 cargoes in the first quarter of last year, Refinitiv Eikon shiptracking data shows.
The United States and China started imposing tariffs on each other’s goods in July last year, although talks are now underway to resolve the long-running trade dispute. As the spat heated up from mid-2018, China added LNG to its tariff list in August and imposed a 10-percent duty on LNG in September.
The United States is the world’s fastest-growing exporter of LNG, while China is the fastest-growing importer as Beijing weans the country off coal to reduce pollution.
“We are very focused on China. We think this is a market that is extremely exciting to Cheniere,” said Cheniere Chief Executive Jack Fusco.
“I believe with the infrastructure that the Chinese companies are investing in today, whether it be LNG storage or natural gas storage or more terminals, (it’s) all positive and will help China have not such a volatile demand,” Fusco said.
He added that China’s coal-to-gas switch was just beginning and will be a big source of demand growth, and that the country’s appetite for gas for power generation will also grow.
China’s demand will be more than enough to absorb additional supply expected from Russia through the Power of Siberia natural gas pipeline that is due to start up at the end of the year, Fusco also said.
Separately, Cheniere has delivered the first cargo from its newly commissioned Sabine Pass train 5 and is mulling its financing strategy for train 6, Fusco said.
(Reporting by David Stanway and Meng Meng in SHANGHAI; Writing by Jessica Jaganathan in SINGAPORE; Editing by Tom Hogue)